Lo Ka Chun v. Lo To and Another

Case No.

Court

Date11 Jun 1984

Judge—

Case Document

100%Judiciary

HCA002015B/1980

IN THE HIGH COURT OF JUSTICE

1980, No.2015

BETWEEN

	LO KA CHUN otherwise known as BRIAN LO	Plaintiff
	AND
	LO TO	1st Defendant
	LAW TSOI	2nd Defendant

___________

Coram: Hon. Clough, J.

Dates of Hearing: 14, 15, 16, 17, 18, 21 & 22 May 1984

Date of Delivery of Judgment: 11 June 1984

__________

JUDGMENT

__________

1. These are my reasons for making an order on the 22nd May 1984 striking out the Re-Amended Statement of Claim of the Plaintiff in this action and directing that the action stand dismissed unless the Plaintiff applies within 6 weeks to serve a new Statement of Claim.

2. The action is one of several actions instituted in relation to the substantial assets inc1uding 2 shipyards businesses and shares in 5 companies claimed by members the family of the late Mr. Lo Chean who died in February 1960. The late Mr. Lo Sum, who was a son of Mr. Lo Chean, died on the 16th October 1970. The Plaintiff is the son of Mr. Lo Sum and in this action he sues the Defendants who are also sons of Mr. Lo Chean and brothers of Mr. Lo Sum.

3. Between 1975 and 1978 the Defendants were involved in litigation concerning the above mentioned assets in which the Plaintiff was not a party and on the 28th September 1978 they arrived at a compromise of the consolidated actions in which they had been involved.

4. On the application of the Plaintiff pursuant to Rule 53 of the Non-Contentious Probate Rules Yang J., as he then was, made an order on the 30th July 1979 (which was amended on the 17th October 1979) that a reconstruction of Lo Sum's Will dated the 14th August 1970 be admitted to proof for the purposes of a limited grant. Pursuant to that order the Plaintiff obtained on the 28th January 1980 a limited grant of probate of Lo Sum's Will dated the 14th August 1970 under which Lo Sum appointed the Plaintiff to be the Executor and sole beneficiary of his estate. On the 26th April 1980 the Plaintiff issued the writ in this action against the Defendants.

5. It suffices to say at this stage that the Plaintiff seeks to establish, as Executor and sole beneficiary of Lo Sum's estate, various forms of relief against both Defendants on the footing that Lo Sum was until his death on the 16th October 1970 an equal partner with each of the Defendants in the businesses of the Cheoy Lee and Hip Hing Cheung Shipyards, that the Defendants have failed to account for the assets of the partnership businesses, that they have continued the businesses after dissolution and that they have "wrongfully" used the partnership assets for their own purposes. The Plaintiff also claims to be entitled to various forms of relief against the first Defendant on the footing that the first Defendant is a trustee and the Plaintiff is the sole beneficiary under a written instrument of trust dated the 18th August 1970 relating to one-third of the "shares" in Cheoy Lee Shipyard and in various companies connected with the alleged partnership businesses.

6. The first Defendant's application to strike out comes after the close of the pleadings and at a late stage in this four year old action. There were two substantial interlocutory hearings resulting in a reserved judgment by Mr. Commissioner Litton, Q.C., on the 15th December 1980 and by Barnes J. on the 14th October 1981. The action went to sleep between the judgment of Barnes J. and the 29th December 1982 when the Plaintiff gave notice of intention to proceed.

7. The state of the pleading at this stage was as follows. The Statement of Claim had been filed on the 7th July, amended on the 28th July and re-amended on the 23rd September 1980. The Defence and Counterclaim of the first Defendant had been filed on the 14th October 1980 and the Defence and Counterclaim of the second Defendant had been filed on the 28th November 1980.

8. Having given notice of intention to proceed the Plaintiff filed his Reply and Defence to Counterclaim of each of the Defendants on the 22nd February 1983 and the action proceeded with various interlocutory applications. On the 25th March 1983 the Plaintiff issued a summons for directions and on the 9th May 1983 the Master made an order for discovery by exchange of lists within 4 months. On the latter date the Plaintiff requested further and better particulars of the first Defendant's Defence and Counterclaim and these were supplied on the 14th July 1983.

9. Daunted by the time and expense envisaged in the trial of the partnership issue the first Defendant's solicitors, acting on the advice of their leading counsel, sent a letter to the Plaintiff's solicitors on the 7th October 1983 seeking their agreement for three issues set out in the letter to be dealt with as preliminary issues so as to avoid the necessity of trial of the partnership issue if the Plaintiff should be unsuccessful on those issues. In their letter the first Defendant's solicitors expressed the view that they were proposing the obvious course now that the pleadings were closed.

10. By their letter dated the 1st November 1983 the Plaintiff's solicitors disagreed with the proposal for preliminary issues. They pointed out that the pleadings were not in order because they still had pending applications against both Defendants for further and better particulars of their pleadings. They also indicated their view that the first two proposed preliminary issues were pleading matters which should be considered under 0.18 r.19 and that the determination of the third preliminary issue (which related to the alleged trust instrument dated the 18th August 1970) would not dispose of the case because the Plaintiff alleged "other avenues by which the Defendants now hold one-third of the suit property in trust for him."

11. However the Plaintiff's solicitors' letter ended on a more non-committal note by observing that they would keep an open mind as to preliminary issues but that they should await the determination by the court of the difference between the parties as to the pleadings and drew attention to the dangers inherent in trying to split the trial issues.

12. On the 15th November 1983 the first Defendant's solicitors replied that they had instructions to proceed with an application for the trial of preliminary issues. They expressed surprise at the Plaintiff's solicitors intimation that the pleadings were not in order in view of the fact that the parties were proceeding to discovery. They further expressed the view that the issues between the parties were sufficiently defined and the merits for trial of the preliminary issues outlined in their previous letter could easily be discerned from the pleadings exchanged to date.

13. They sought to deal with the question of pending applications for particulars by contending that the pending application against the second Defendant would not affect their proposals and by voluntarily furnishing such particulars of the first Defendant's Defence as they were prepared to furnish on a "without prejudice" basis. They also professed inability to see by what other pleaded avenue the first Defendant could be said to be holding one-third of the suit property in trust for the Plaintiff.

14. Accordingly on the 17th November 1983 the first Defendant issued a summons under 0.33 r.3 for an order that the three issues which had been set out in his solicitors' letter dated the 7th October 1983 be tried as preliminary issues in the action. The first issue raised a question of probate law and practice. In his Defence the first Defendant had denied that the Plaintiff was the Executor and sole beneficiary of Lo Sum's estate and pleaded that Lo Sum's Will had not been duly attested in accordance with the requirements of the Wills Ordinance (Cap. 30) and was therefore invalid. The Plaintiff countered by pleading in his Reply that it was not open to the first Defendant to challenge the validity of the Plaintiff's grant and that the court had no jurisdiction to entertain any such challenge until the probate had been recalled. The first issue sought the determination of this question as a preliminary issue.

15. The second issue was framed in two limbs, the first of which raised the question whether on the facts alleged in the Re-Amended Statement of Claim the Plaintiff would be entitled to any of the reliefs claimed in that pleading arising out of the alleged partnership. If the question raised in the first limb were to be answered in the affirmative then the second limb raised the question whether the reliefs sought by the Plaintiff were time barred under the Limitation Ordinance (Cap. 347).

16. The third issue raised the question whether on the facts alleged in the Re-Amended Statement of Claim and upon its true construction the instrument dated the 18th August 1970 which the Plaintiff alleged to be a trust instrument in his pleading was capable as a matter of law of creating a trust in favour of the Plaintiff or the deceased Lo Sum.

17. The issue of the first Defendant's summons for the trial of preliminary issues prompted the Plaintiff to issue a summons on the 13th January 1984 for leave to amend the Reply and Defence to Counterclaim of the first Defendant to seek to counter the limitation defence on the partnership issue by the insertion of a new paragraph 3A relying on a letter dated the 17th June 1974 from the first Defendant to the Plaintiff as an acknowledgment of the first Defendant's liability to account to the Plaintiff for the assets of the partnership. This application of the Plaintiff was supported by an affirmation of his solicitor Mr. Wong Sui Kwan exhibiting the first Defendant's letter dated the 17th June 1974 and the written instrument dated the 18th August 1970 allegedly referred to in the letter.

18. In his affirmation Mr. Wong also affirmed that in view of the first Defendant's application for trial of preliminary issues it was thought appropriate to seek an amendment of the Reply at the same time to plead the matter of acknowledgment. At this stage no attempt was made to apply to amend the Re-Amended Statement of Claim.

19. The first Defendant opposed the Plaintiff's application to amend the Reply and the Plaintiff opposed the first Defendant's application for the trial of the three preliminary issues. On the 17th January 1984 Master Clay granted the Plaintiff's application to amend his Reply and on the 1st February 1984 he refused the first Defendant's application for the trial of preliminary issues. On the 10th February 1984 the first Defendant gave notice of appeal against both Master Clay's orders and both appeals were set down for hearing before me on the 14th May 1984.

20. On the 8th May 1984 the first Defendant took out a Notice of Motion to move the court on the 14th May for an order under 0.18 r.19 and under the inherent jurisdiction of the court striking out the Re-Amended Statement of Claim and dismissing the action or alternatively striking out specified paragraphs of that pleading.

21. According1y on the 14th May 1984 I had before me for hearing the first Defendant's two appeals and his motion. At the request of the parties I sat in Chambers to hear all these matters because one of the leading counsel was without robes which made a hearing of the motion in court impracticable.

22. After opening on the background of the action and its procedural history, Mr. Saville, leading counsel for the first Defendant, made submissions on the two appeals and then on the motion to strike out. On the afternoon of the 16th May when he concluded his submissions on the striking out application Mr. Saville submitted that if the Re-Amended Statement of Claim was liable to be struck out or amended it would be inappropriate to consider the preliminary issues and that therefore the appropriate course would be to decide the striking out issue first after hearing counsel on both sides on that issue. At this stage there was no indication of any intention of the Plaintiff to amend his pleading.

23. Mr. Beveridge, leading counsel for the Plaintiff, did not agree to this proposal and contended that the striking out application was de minimis. He wanted to follow the same sequence as Mr. Saville in his submissions. I permitted him to do so until the afternoon of the 18th May. Immediately before the mid-day adjournment Mr. Beveridge had indicated that the Plaintiff proposed to make amendments to the Re-Amended Statement of Claim at a later stage of the action. He did not indicate what the proposed amendments would be and stated that the actual proposed amendments had not been decided. However it seemed to me that although Mr. Beveridge had not yet reached the striking out issue in his submissions I should accede to Mr. Saville's contention that in view of the supervening uncertainty over the pleadings it would be wrong to continue to hear further submissions on the appeals on the preliminary issues and the amendment to the Reply. Mr. Beveridge very properly did not persist in arguing the contrary and I accordingly directed that argument should proceed on the striking out issue and that that issue should be decided first.

24. After that issue had been decided in the manner indicated at the beginning of this judgment I adjourned the first Defendant's two appeals to the hearing of the Plaintiff's application to serve a new Statement of Claim and gave the parties liberty to apply to restore the appeals so as to deal with costs if no application should be made by the Plaintiff to serve a new Statement of Claim.

25. In his initial submissions Mr. Saville contended that the application to strike out should not fail by reason of its being made late although he rightly conceded that the delay in making the application was a material factor for consideration by the court. He relied on the pattern of the history of the action to justify such a late application. He stressed that deficiencies in the pleading of the Re-Amended Statement of Claim had been drawn to the attention of the Plaintiff and his advisers in the previous substantial interlocutory applications.

26. Thus in his judgment dated the 15th December 1980 Mr. Commissioner Litton, in the course of dealing with applications by applicants who were not parties to this action for the vacation of the registration of this action as a lis pendens under the Land Registration Ordinance affecting their respective properties, criticised the pleading in the Re-Amended Statement of Claim. He considered that the pleading lacked the material averments to support the permanent injunction sought in paragraph (12) of the prayer restraining the Defendants from disposing of the assets therein mentioned. He pointed out that paragraph 12 of the pleading included an allegation that the Defendants had used the funds of certain companies to purchase properties and that if that were the case the companies, and not the Plaintiff, should be the plaintiff in the action.

27. Mr. Commissioner Litton also examined with care and accuracy the provisions of the Partnership Ordinance (Cap. 38) which apply on dissolution and stressed the importance of inter alia section 45 of that Ordinance in providing that, subject to any agreement between the partners, the amount due from continuing partners to the representatives of a deceased partner in respect of the deceased partner's share is a debt accruing at the date of the dissolution or death. The substance of his decision was that if the Plaintiff succeeded in the action he could only recover a money judgment and not specific property as claimed by him.

28. Another example of defective pleading of limited scope but glaring in nature was mentioned in Barnes J.'s judgment dated the 14th October 1981 dealing with the joinder issue then before him when the Plaintiff made what proved to be an unsuccessful attempt to add as Defendants in the action eight of the registered owners of some of the properties which the Plaintiff claimed to be held by them on trust for the partnership.

29. Barnes J. referred to the fact that the properties pleaded in the Re-Re-Amended Statement of Claim before him to have been acquired with partnership moneys before Lo Sum's death and vested in agents or nominees of the partnership included properties allegedly vested in Hip Hing Cheung Shipyard Ltd. and Phowntye Company Limited which were pleaded in paragraph 3A of the same pleading to have been incorporated after the death of Lo Sum when, on the Plaintiff's case as pleaded, the partnership had been dissolved.

30. At the time these errors were evidently conceded by leading counsel for the Plaintiff to be serious errors which would have to be amended although he gave no indication as to what the proposed amendments would be.

31. In the event the decision of Barnes J. on the joinder issue eliminated the Re-Re-Amended Statement of Claim but there had been no attempt by the Plaintiff to cure the above mentioned defect by amending paragraph 12 and the Schedule to the Re-Amended Statement of Claim.

32. Mr. Saville who has acted for the first Defendant from the early stages of the action contended that under the circumstances the first Defendant had been right to defer making a striking out application until it was clear that the Plaintiff did not intend to amend the Re-Amended Statement of Claim to deal at least with the defects in his pleading which had been pointed out by Mr. Commissioner Litton and Barnes J. A further material factor indicative of possible future amendments of the Plaintiff's pleading was that although the Re-Re-Amended Statement of Claim which Barnes J. disallowed was primarily concerned with the consequences of the joinder of additional defendants it had also contained other amendments affecting the first and second Defendants in the form of an amendment of paragraph 19 of the pleading and paragraph 4A of the prayer.

33. Mr. Saville contended that when the action went to sleep for over a year the first Defendant could not be blamed for taking no action. Thereafter the first Defendant had waited until it became clear at the stage of discovery, which was ordered on the 9th May 1983 on the Summons for Directions issued on the 25th March 1983, that the Plaintiff was committed to the Re-Amended Statement of Claim before considering applying to strike out as an alternative to the trial of preliminary issues.

34. Despite Mr. Beveridge's forceful argument that the striking out application came too late I concluded that in the circumstances of this case the lateness of the application was a material but not conclusive factor. The practice as outlined in the Annual Practice, Vol. 1, paragraph 18/19/2 and Bullen and Leake, 12th edition, at p.141, is that striking out applications should always be made promptly after the service of the offending pleading and, as a rule, before the close of pleadings. Such of the authorities referred to in the Annual Practice as were cited to me were decided in relation to the former 0.25 r.4 which did not contain the words "at any stage of the proceedings" which were formerly contained in 0.19 r.27 and were inserted in 0.18 r.19(1) when the former 0.25 r.4 and 0.19 r.27 were amalgamated in modified form by the 1962 Revision of the Rules of the Supreme Court.

35. In the face of those words it would clearly not be right to introduce an arbitrary and decisive time limit for the application as a matter of practice. Moreover in Tucker v. Collinson (1886) 3 W.R. 354 (not fully reported on this point in (1886) 16 Q.B.D. 562) the Court of Appeal upheld an order made under 0.25 r.4 after the close of pleadings staying an action as being frivolous. In my judgment the true position is that where an application to strike out is not made promptly under 0.18 r.19 the delay is not to be treated as necessarily fatal but the court may in its discretion decline to exercise its jurisdiction.

36. In the present case the first Defendant's application to strike out the Re-Amended Statement of Claim is based on all the grounds contained in 0.18 r.19(1) and on the inherent jurisdiction of the court but Mr. Saville framed his submissions on the footing that the pleading (1) disclosed no reasonable cause of action by reason of the absence of material averments (0.18, r.19(1)(a)) and (2) was highly embarrassing and likely to prejudice, embarrass, or delay the fair trial of the action (0.18, r.19(1)(c)).

37. Clearly the striking out application could have been made when the Re-Amended Statement of Claim was served but the explanation given by Mr. Saville for the delay was, in my judgment, reasonable in the circumstances of this action which had been delayed by over a year of inactivity on the part of the Plaintiff after defects in the pleading of the Re-Amended Statement of Claim had been the subject of judicial comment followed in one case by the acknowledgment of the need for amendment. Mr. Beveridge contended that there had been no previous criticism of the Re-Amended Statement of Claim on any substantial ground, no application for further and better particulars and that the application for the trial of preliminary issues was inconsistent with the striking out application. However the expectation by the first Defendant's advisers of amendment of the Plaintiff's pleading was in my view genuine and reasonable until it became clear at the time of the Summons for directions that the Plaintiff adhered to his pleading.

38. As to the first Defendant's initial election to apply for the trial of preliminary issues, I accept that clearly that application becomes superfluous when the subsequent striking out application succeeds. However, as Mr. Saville rightly submitted, an application to strike out and an application for the trial of preliminary issues can be genuine alternative procedures and it is not always obvious whether a point of law arising on a pleading is of such a character that it may be decided on the "plain and obvious" requirement of 0.18 r.19 or whether it is of such a weighty character that it should be set down for argument under 0.33 r.3 as a preliminary issue. See Hubbuck v. Wilkinson [1899] 1 Q.B. 86 (C.A.) per Lindley M.R. at p.91 where the distinction between the two procedures was emphasised in relation to the former 0.25 rr. 2 & 4 and c.f. Kemsley v. Foot (1951) 2 K.B. 34 (C.A.) where the English Court of Appeal applied Hubbuck v. Wilkinson (supra) but was nevertheless persuaded by the parties to treat the issue raised between them as one for their decision after full argument. The procedural question was not in issue in the subsequent appeal to the House of Lords which only concerned itself with the substantive question: see Kemsley v. Foot (1952) A.C. 345 (H.L.) per Lord Porter at p.354.

39. In the present case two of the preliminary issues proposed by the first Defendant raise questions based on the facts alleged in the Re-Amended Statement of Claim. The correspondence shows that the Plaintiff's solicitors contended by their letter dated the lst November 1983 and written on the advice of leading counsel that the first two proposed issues were pleading matters for consideration under 0.18 r.19.

40. Although the first Defendant's solicitors denied by their letter dated the 15th November 1983 that the pleadings were not in order and expressed the view that the issues between the parties were sufficiently defined, this view was clearly expressed on the basis that preliminary issues were sought to be raised on the matters alleged in the pleadings as they stood. By the time the first Defendant's application for the trial of preliminary issues came before the Master for hearing one of the grounds of opposition advanced by leading counsel for the Plaintiff was evidently that the first Defendant was attempting to use the preliminary issue procedure under 0.33 r.3 to circumvent 0.18 r.19 and make an application which should take the form of a striking out application under the latter rule.

41. In my judgment there was therefore persuasive force in Mr. Saville's contention that the first Defendant's application under 0.18 r.19 was really an acceptance of the Plaintiff's challenge, made first in correspondence and then at the hearing before the Master of the first Defendant's application for the trial of preliminary issues. Furthermore, for the reasons given above, I regarded the two applications as genuine alternatives when they came before me for hearing on the 14th May 1984 although the preliminary issue matter took the form of an appeal by way of actual re-hearing under 0.58 and the striking out application was made by motion under 0.18 r.19 and the inherent jurisdiction of the court.

42. Neither of the two procedural hearings before Mr. Commissioner Litton and Barnes J. respectively were in my judgment appropriate situations for a fundamental attack on the pleadings by the first Defendant. He was not a party to the motions before Mr. Commissioner Litton and although he was one of the appellants in the matter before Barnes J. it turned on a joinder issue in relation to the additional Defendants who were also appellants.

43. Accordingly whilst there had been a long delay in making the striking out application which came as an alternative to the application for the trial of preliminary issues, after the filing of a Defence and Counterclaim by the first Defendant and after the close of pleadings and exchange of lists of documents and preliminary inspection by the Plaintiff of the first Defendant's formidable stacks of documents, I considered that the delay should not be treated as fatal. The explanation given for the delay was reasonable in all the circumstances and in my judgment the application deserved to be considered on its merits whilst making due allowance for the delay in making it and for the fact that in the course of the hearing of the first Defendant's appeal against the Master's refusal to order the trial of preliminary issues Mr. Beveridge had indicated that amendments to the Re-Amended Statement of Claim were contemplated and finally had said in the course of Mr. Saville's closing submissions that he wished to withdraw any previous indication that such amendments were necessary.

44. It is well settled that the coercive powers conferred on the court to strike out a pleading under 0.18 r.19 and its inherent jurisdiction will only be exercised with the greatest care and circumspection and in plain and obvious cases. When considering whether a statement of claim discloses a reasonable cause of action the court adopts a liberal approach and not the strict approach which applied to the old demurrer. Furthermore a defendant must not be too ready to find himself embarrassed or prejudiced by the pleading of the claim against him.

45. On the other hand, as James L.J. observed in Davy v. Garrett (1878) 7 Ch. D. 473 (C.A.) at p.486 "........ a Defendant may claim ex debito justitiae to have the Plaintiff's case presented in an intelligible form, so that he may not be embarrassed in meeting it." Again in the same case at p.489 Thesiger L.J. observed of alternative claims -

"......... in any properly constituted system of pleading, if alternative claims are alleged, the facts ought not to be mixed up, leaving the Defendant to pick out the facts applicable to each case; but the facts ought to be distinctly stated, so as to show on what facts each alternative of the relief sought is founded.

46. Indeed Lord Edmund-Davies recently provided a salutory and emphatic reminder of the primary purpose of pleadings which can still prove of vital importance when he observed, albeit in a different context, in Farrell v. Sec. of State for Defence [1980] 1 W.L.R. 172 (H.L.) at p.180 B-

"That purpose is to define the issues and thereby to inform the parties in advance of the case they have to meet and so enable them to take steps to deal with it."

47. Considering the pleadings in the Re-Amended Statement of Claim in the light of these fundamental principles I considered that the attack made upon the pleading by Mr. Saville on behalf of the first Defendant, albeit at a late stage in the action, was fully justified under 0.18 r.19(1)(c).

48. It is manifest from the pleading that the substance of the Plaintiff's claim stems from two basic assertions. One is an alleged partnership of his deceased father Lo Sum with the Defendants subsisting until Lo Sum's death on the 16th October 1970. The other basic and alternative assertion is that the Plaintiff is the beneficiary and the first Defendant is the trustee of certain assets of or connected with the partnership under a trust instrument dated the 18th August 1970.

49. Apart from those two basic assertions the pleading has vital material gaps and contains very serious obscurities. To the extent that it is an action for the winding up of a dissolved partnership it erroneously seeks to relate the interest of a deceased partner's personal representative on dissolution under the Partnership Ordinance (Cap. 38) to the specific partnership assets and the warning implicit in Mr. Commissioner Litton's earlier judgment has gone unheeded.

50. The pleading as a whole defies accurate analysis even on the broad and liberal basis appropriate to a striking out application. In my judgment the effect of the submissions of leading counsel on both sides was to demonstrate that it was thoroughly obscure and embarrassing unless account were to be taken of a substantial number of concessions, oral amendments and explanations which Mr. Beveridge felt constrained to make. Mr. Saville rightly complained in closing that he had addressed the court on one pleading and when Mr. Beveridge had concluded his submissions there was another pleading. Moreover some of the gaps and obscurities were never filled or explained.

51. Following the sequence of the Re-Amended Statement of Claim I have identified below a substantial number of matters the combined effect of which, in my judgment, make the pleading one which is likely to prejudice, embarrass, or delay the fair trial of the action. They are as follows:-

	(1)	In paragraph 3 of the pleading it was pleaded that until his death Lo Sum was an equal partner with each of the Defendants under the style or firm names of Cheoy Lee Shipyard and Hip Hing Cheung Shipyard. In paragraph 4 it was alleged that during the continuance of the partnership each of the partners "......... withdrew sums from the partnership and used them for their own purposes or for the purposes of the partnership." It was further pleaded that the only particulars the Plaintiff was able to give of thess allegations before discovery appeared in the ensuing paragraphs 5 to 12.
		Paragraph 5 alleged that the three partners had used partnership funds to form, purchase or cause to be purchased 5 named limited companies. Paragraphs 6 to 10 inclusive pleaded the purposes of all the companies except Leung Fung Enterprises Limited which was referred to in paragraph 10 but whose purposes were not specified.
		In paragraphs 6, 7 and 9 the issued shares of three of the 5 companies, namely Lo Brothers Limited, General Metal Works Limited and Foo Gee Investment Company Limited were alleged to be registered in the names of each of the three partners and their respective shareholdings were specified. In paragraph 8 the issued share capital of Penny's Bay Investment Company Limited was alleged to be 32 shares of $100 each, of which Lo Sum and the first Defendant were alleged to be the registered holders of one each, and the balance of 30 shares were alleged to be registered in the name of Lo Brothers Limited. In paragraph 10 the issued share capital of Leung Fung Enterprises Limited was alleged to be 6,864 shares of $100 and Lo Sum was alleged to be "the registered and beneficial owner of 1,288 shares". It was not pleaded that the balance of issued shares were registered in the names of either of the Defendants or any of the above mentioned 5 companies.
		Following upon those averments it is pleaded in the first sentence of paragraph 11 that each of the alleged partners and Lo Brothers Limited (in the case of its holding in Penny's Bay Investment Company Limited) held the shares in their respective names "in trust for the partnership". Mr. Saville asked in vain where were the averments of fact in the pleading to support this allegation of trusteeship having regard to the alternative purposes pleaded in paragraph 4 and to the allegation in paragraph 10 that Lo Sum was the beneficial owner of 1,288 shares in Leung Fung Enterprises Limited. Mr. Beveridge never dealt with this question.
		In the fourth sentence of paragraph 11 it was pleaded in the further alternative that Lo Sum was beneficially entitled to the shares registered in his name. Mr.Saville raised the same question in relation to the allegation in this sentence, where were the averments of fact upon which the allegation was based? Save for paragraph 10, there appeared to be none and again there was no answer from Mr. Beveridge.
		In my judgment these defects in the pleading were not of a merely technical character because they provided the basis for the implied or resulting trust which Mr. Beveridge sought to introduce in relation to subsequent parts of the pleading.
	(2)	Paragraph 11 was further attacked by Mr. Saville He contended, and rightly, that there were no averments of fact to support the alternative allegations in the second and third sentences of that paragraph. to the effect that all the assets of the companies were held by them in trust for the partnership or alternatively for Lo Sum and each of the Defendants in equal shares. Mr. Beveridge said that he abandoned both these allegations.
	(3)	Paragraph 12 alleged that during the continuance of the partnership Lo Sum and the Defendants had "........... used the funds of the partnership and/or of the companies ........." to purchase the properties mentioned and registered in the names of the persons or companies shown in the Schedule to the pleading. Notwithstanding this pleading in the alternative, paragraph 12 goes on to plead that "those persons" were the agents or nominees of the partnership or of Lo Sum and the Defendants and that in the premises "all of the properties in the Schedule" were assets of the partnership to which Lo Sum or his estate and each of the Defendants were entitled in equal shares.
		Mr. Saville rightly contended that the necessary averments to justify this pleading were absent because the paragraph begins by pleading in the alternative that the funds used to require the Scheduled properties were those of "the partnership and/or of the companies". He also stressed that despite the acknowledgment by leading counsel to Barnes J. of the defect requiring amendment the Plaintiff continued to persist with the allegation that some of the properties had been registered in the names of companies which were not incorporated until after Lo Sum's death: namely Hip Hing Cheung Shipyard Limited and Phowntye Company Limited.
		To these submissions which were, in my judgment, sound and of substance, there was no answer on behalf of the Plaintiff.
	(4)	By paragraph 15 the Plaintiff pleaded the terms of a written instrument dated the 18th August 1970 which had been alleged in paragraph 2 to be a trust instrument constituting the first Defendant a trustee for the Plaintiff. In paragraph 22 it is pleaded, inter alia, that the first Defendant held "the shares referred to" in the instrument on trust for the Plaintiff "until" he attained his majority.
		One of the alleged declarations of trust contained in the instrument which is pleaded in paragraph 15 is that "the 124 shares in Leung Fung Enterprises Limited" would be dealt with in a certain way.
		Paragraph 16 pleads that the reference in the instrument to 124 shares in Leung Fung Enterprises Limited "ought to have been a reference to 1,288 shares". Mr. Saville contended that there is no factual averment upon which to base such a pleading. Mr. Beveridge replied that the real question was whether extrinsic evidence of intention of the maker of the instrument was admissible. If it was not, then the court looked only at the instrument. If such evidence was admissible the court had to construe the instrument in the light of that evidence and particulars of the matters relied upon by the Plaintiff could be required. He accepted that it might be that different relief such as rectification should be sought.
		For my part I consider that the use of the words quoted above in paragraph 16 is thoroughly embarrassing to the first Defendant. The pleading that a reference to 124 shares "ought to have been a reference to 1,288 shares" is equally consistent with the alternative contentions that the reference is to be construed to mean something different or that the instrument should be rectified to mean something different. The first Defendant is entitled to know what case he has to meet at the trial.
	(5)	A fundamental source of embarrassment due to defective and obscure pleading arose in relation to paragraph 14 and the first sentence of paragraph 19. By paragraph 14 the Plaintiff pleaded two transfers of shares from the name of Lo Sum to that of the first Defendant on the 17th August and the 13th October 1970 respectively. The earlier transfer related to the shares in the name of Lo Sum in all the companies except Penny's Bay Investment Company Limited. The later transfer related to the shares in the name of Lo Sum in the latter company.
		By the first sentence of paragraph 19 it was pleaded that the transfers of shares referred to in paragraph 14 were never intended to and did not affect the beneficial interest therein. As a further alternative to the alternative pleadings in paragraph 20, to which I will return below, paragraph 21 pleaded that the effect of the transfer of shares to the first Defendant as pleaded in paragraph 14 was that the first Defendant held the relevant shares in trust for the partnership, alternatively for Lo Sum and after his death for the Plaintiff.
		Mr. Saville attacked this pleading because it was only sustainable at all if the allegation of trusteeship in the first or fourth sentences of paragraph 11 could be supported whereas, for the reasons mentioned in (1) above that allegation lacked a basis of factual averment. He also attacked the pleading in paragraph 21 because it was based on the general terms of the first sentence of paragraph 19 which he contended were not averments of material facts.
		Mr. Beveridge replied that the combined effect of the first and fourth sentences of paragraph 11 and paragraphs 14 and 21 was that the Plaintiff was pleading an implied or resulting trust arising in favour of the partnership or Lo Sum out of the voluntary transfer of the shares to the first Defendant. The reference to intention in the first paragraph of paragraph 19 was, Mr. Beveridge contended, unnecessary and it was merely repetitive of paragraph 21.
		Mr. Saville complained, not without cause, that this approach to the pleading amounted to selective interpretation or oral editing. However this was a minor matter compared to the announcement by Mr. Beveridge when defending paragraph 22 (which pleads that the first Defendant was the trustee for the Plaintiff of the shares referred to in that instrument) that paragraph 22 presupposed the effective transfer of both the legal and beneficial interest in Lo Sum's shares by the transfers pleaded in paragraph 14 and that paragraph 22 was ineffective without paragraph 14. He went on to say that paragraphs 19, 21 and 22 were clearly alternatives and paragraph 22 was the final alternative to paragraph 19.
		This ingenious attempt to give paragraph 14 two different meanings (one of which was contradicted by the first sentence of paragraph 19) and to create alternatives which were never pleaded was the clearest demonstration of the shroud of obscurity hanging over the pleading in relation to the real issues to be tried. In my judgment it simply will not do to seek to justify obscure pleadings by what amounts to oral amendments and explanations of important matters which should be clearly pleaded so as to define the issues between the parties. I was confirmed in this view by the fact that Mr. Beveridge candidly observed that junior counsel for the Plaintiff felt that it was open to the Plaintiff on the pleadings to contend that the first Defendant was creating a trust in respect of his own assets.

	(6)	In paragraph 20 the Plaintiff first pleaded that "In the premises" (which included the pleading in paragraphs 17 and 18 of two Deeds dated the 7th October 1970 by which both the partnerships were purportedly dissolved and the pleading in paragraph 19 that neither of the Deeds had any legal effect) Lo Sum remained a partner in the partnership until his death. As an alternative to that pleading he pleaded that the first Defendant held the one-third share of Lo Sum in the partnership in trust for Lo Sum and, after his death, in trust for the estate of Lo Sum. Mr. Saville contended that no basis could be found in the earlier part of this pleading for this alternative claim. Mr. Beveridge rightly conceded that both this alternative claim and paragraph (7) of the prayer which was based upon it were not sustainable.
	(7)	One of the many difficulties in ascertaining even the salient allegations in the pleading arises when the reader seeks to identify the subject matter of the trust alleged "in the final alternative" in paragraph 22 to arise under the alleged trust instrument dated the 18th August 1970 pleaded in paragraph 15, but originally referred to in paragraph 2 without qualification. The central question is whether it is alleged that the share in Cheoy Lee Shipyard which is the subject of the trust is the share of Lo Sum or of the first Defendant himself. The same question arises in relation to "the one third of the shares" in the companies referred to in paragraph 15.
		Mr. Saville relying on first principles of trust law, stressed the absence of any averment that the first Defendant had any legal or beneficial interest in the subject matter of the alleged trust or was declaring a trust over his own property. He referred to paragraph 16 which alleged that the reference in the instrument to 124 shares in Leung Fung Enterprises Limited ought to have been a reference to 1,288 shares. The latter shares were pleaded in paragraph 10 to be in the beneficial ownership of Lo Sum and it was not alleged that the first Defendant held any shares in Leung Fung Enterprises Limited. Furthermore paragraph 19 pleaded in the first sentence that the transfers pleaded in paragraph 14 had no effect on the beneficial interest in the shares transferred and there was no averment that the first Defendant had the beneficial interest in the shares.
		As indicated at (5) above, Mr. Beveridge sought to deal with these submissions in the manner I have, described and held to be unjustified.
		However, for understandable reasons, he could provide no answer of any kind to Mr. Saville's contention that there was no averment in the pleading that Lo Sum's "share" in either of the partnerships, and in particular his share in the Cheoy Lee Shipyard, had been transferred to the first Defendant as trustee. Furthermore there was no pleading of any of the surrounding circumstances to explain the meaning of "one-third of the shares in Cheoy Lee Shipyard". Bearing in mind that it was pleaded in paragraph 3 that Lo Sum remained a one-third partner in both the partnerships until his death, these are serious obscurities which remained unanswered by Mr. Beveridge who submitted that it was Lo Sum's company shares which were to be identified in the trust instrument dated the 18th August 1970 notwithstanding the fact that the transfer of the Penny's Bay shares to the first Defendant was not effective until the 13th October 1970 and only 124 Leung Fung Enterprises Limited shares were referred to in the instrument.
		Mr. Saville raised further arguments attacking paragraph 22 on the footing of the fundamental proposition that a partner cannot dispose of his interest in the partnership or his assets without the consent of his partners but in view of the numerous deficiencies in the pleadings I do not consider it necessary to pursue that issue now.
		I mention as further indication of confusion in the pleading that in paragraph (9) of the prayer a declaration is sought (which can only be referable to the alleged trust instrument dated the 18th August 1970) that inter alia "Lo Sum's deceased's share in the partnership" (i.e. not only his share in the Cheoy Lee Shipyard which is referred to in paragraph 15 and by inference in paragraph 22) was held from the 18th August 1970 by the first Defendant on trust for Lo Sum and after his death on trust for his estate or for the Plaintiff.
	(8)	Paragraph (5) of the prayer seeks damages for conversion of partnership assets. When Mr. Saville contended that there were no averments of fact to support a prayer for such relief Mr. Beveridge relied on the allegations in paragraphs 26 and 27 and added that there could be a ground for relief on the basis of constructive trust. This was another, albeit a minor, example of oral explanation or amendment.
	(9)	By paragraph (15) of the prayer the Plaintiff sought a declaration that the Agreement of Settlement referred to in paragraphs 26 and 27 and made by the Defendants on the 28th September 1978 to settle their litigation over partnership assets was void. Mr. Beveridge conceded that the prayer for this relief was hard to support.

52. In the light of the above listed matters and particularly the situations described in (5) and (7) above I concluded that it was plain and obvious that the Re-Amended Statement of Claim, given as fair and liberal consideration as possible, was highly embarrassing and wholly inadequate as a means of contributing to the definition of clear issues between the parties. Furthermore it seemed to me that such a pleading was likely to prejudice, embarrass and delay the fair trial of the action. It clearly needs to be reconsidered and the admitted dead wood eliminated. The claims of the Plaintiff need to be pleaded with precision so that the first Defendant knows what the case against him really is. In my judgment this need outweighs the factor of delay on the part of the first Defendant in making his application to strike out. Accordingly I ordered it to be struck out on the terms indicated above.

53. It is not therefore necessary for me to deal with the arguments in relation to the first limb of the first Defendant's application based on the absence of a reasonable cause of action for the purposes of 0.18 r. 19(1)(a) and the inherent jurisdiction of the court. It is also not necessary to deal with the argument on behalf of the first Defendant that the claim of the Plaintiff based on the allegation that Lo Sum was a partner with the Defendantsuntil until his death is time barred.

54. I will only add this observation regarding paragraphs 19, 23 and 24 of the Re-Amended Statement of Claim which came under forceful attack from Mr. Saville for lack of particularisation in breach of the requirements of 0.18 r.12(1) and which Mr. Beveridge argued should be the subject of an application for particulars under 0.18 r.12(3) and not a striking out application. If the Plaintiff applies to serve a new Statement of Claim and intends to repeat therein the allegations in paragraph 19 of the Re-Amended Statement of Claim that the Deeds dated the 7th October 1970 were not intended to and did not have any legal effect and the serious allegations in paragraphs 23 and 24 of misapplication of partnership or trust property, then it behoves the Plaintiff to avoid embarrassment to the first Defendant by pleading the facts which will put him on his guard and tell him what he has to meet at the trial.

55. At the very least 0.18 r.12(1) requires this to be done by way of particulars but although 0.18 r.7 requires him to plead in summary form only "the material facts" on which he "relies for his claim" this means all the material facts relied on to formulate a complete cause of action: see the dicta of Scott L.J. in Bruce v. Odhams Press Ltd.[1936] 1 K.B. 697 (C.A.) at p.712 and the dicta of Cotton L.J. in Phillipps v. Phillipps (1878) 4 Q.B.D. 127 at p.139 cited in Vol. I of the Annual Practice at paragraph 18/7/5 and c.f. the warning by Brett L.J. in the latter case at p.133 that -

"If parties were held strictly to their pleadings under the present system they ought not to be allowed to prove at the trial, as a fact on which the would have to rely in order to support their case, any fact which is not stated in the pleadings. Therefore, again, in their pleadings they ought to state every fact upon which they must rely to make out their right or claim."

56. Finally I add that the following brief observations regarding the question of limitation. I was prepared to apply Riches v. D.P.P. [1973] 2 All E.R. 935 (C.A.) and considered it open to the court to strike out the Plaintiff's claim based on Lo Sum's partnership interest if it was time barred unless it could be shown that there might be an escape from the time bar imposed by the Limitation Ordinance.

57. I consider myself bound by the decision of the House of Lords in Knox v. Gye (1872) L.R.5 H.L.656 to hold that any claim of Lo Sum's personal representative in an action for account against the Defendants would be time barred at the expiration of 6 years from his death on the 16th October 1970 pursuant to section 4(2) of the Limitation Ordinance (Cap.347).

58. However Mr. Beveridge relied on the pleading in paragraph 3A of the Amended Reply and Defence to Counterclaim of the first Defendant that the first Defendant had by his letter dated the 17th June 1974 to the Plaintiff acknowledged his liability to account to the Plaintiff for the assets of the partnership.

59. In my judgment the issue of acknowledgment that is thus raised is too complex and the arguments I heard were not sufficient to enable me to determine this issue on a plain and obvious footing in a striking out application.

60. In particular Mr. Saville went so far as to contend that an obligation to account could not be the subject of an acknowledgment at all because s.23(3) of the Limitation Ordinance applies only to a recoverable debt or liquidated pecuniary claim. However this proposition is contrary to the decision of Page Wood V.C. in Prance v. Sympson Kay 678 cited in Lindley on Partnership, 14th ed., at p.568 where other authorities are cited to support the proposition that in a partnership case a signed acknowledgment of a liability to account in respect of matters more than 6 years old was sufficient to justify a decree for an account in respect of them, although the acknowledgment did not contain an admission that anything was due, nor any express promise to pay what might be found due on taking the account.

	(P.G. Clough)
	Judge of the High Court

Representation:

Mr. J. Beveridge, Q.C. with Mr. A. Neoh instructed by M/s S.K. Wong & Co. for the Plaintiff.

Mr. M. Saville, Q.C. with Mr. R. Wong instructed by M/s T.S. Tong & Co. for the 1st Defendant.