Man Cheung International Traders Ltd and Another v. Clsa Ltd

DCCJ 6778/2002

IN THE DISTRICT COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

CIVIL ACTION NO. 6778 OF 2002

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Between

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Coram :  H.H. Judge Chow

Date of Hearing :  26^th April 2010

Date of Handing Down Decision :  27^th May 2010

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DECISION

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1.This is the Plaintiffs’ appeal against the order of Master C. Lee dated 22.3.2010 allowing the Defendant’s application for leave to amend its defence.  By this appeal the Plaintiffs seek an order that the said order, in so far as it relates to paragraph 10(1) of the defence, be set aside, and that the Defendant’s application for leave to amend paragraph 10(1) of the defence be dismissed.

2.Paragraph 10 of the Statement of Claim reads:-

“On that day sufficient buyers existed in the NASDAQ market to buy all 3,000 shares at US$75, but for reasons then unknown to the Plaintiffs, the Defendant only executed the order for 1,000 shares at a price of US$75.” 

3.The Plaintiffs argue that the amendment constitutes a withdrawal of admission, because paragraph 10(1) as originally pleaded contains an unequivocal admission by the Defendant that there were sufficient buyers in the market on 3.11.2000 such that the Defendant could have sold all of the Plaintiff’s 3,000 shares of Gemstar at HK$75 on that day if it had intended to do so.  However, paragraph (1) as amended would completely change the meaning of the plea, namely, to the effect that the Defendant only admits that there were sufficient buyers in the market on 3.11.2000 for 3,000 shares to be bought but without any admission that the Defendant could have sold all 3,000 of the Plaintiffs’ Gemstar shares.

4.Before the amendment paragraph 10(1) of the defence reads:-

“(1)           It is admitted that for a short period of time sufficient buyers existed in the NASDAQ market to sell all 3,000 shares at US$75 on 3 November 2000 and that on 3 November 2000 the Defendant executed an order to sell 1,000 shares at a price of US$75.”

5.Paragraph 10(1) of the amended defence reads:-

“(1)       It is admitted that for a short period of time sufficient buyers existed in the NASDAQ market to buy 3,000 shares at US$75 on 3 November 2000 and that on 3 November 2000 the Defendant executed an order to sell 1,000 shares at a price of US$75.”

6.The Plaintiffs argue that if one reads the entirety of paragraph 10(1) of the defence, it is beyond dispute that the Defendant made an express and unequivocal admission that it could have sold the Plaintiff’s 3,000 shares at US$75 on 3.11.2000.

7.In the defence there cannot be any admission.  People are called “buyers” because they buy; they are called sellers because they sell.  Buyers only buy; they do not sell.  Only sellers sell; they do not buy.  Thus in the original defence it is illogical to say “sufficient buyers existed …… to sell all 3,000 shares”.  The situation embraced in the sentence cannot and does not exist.  It requires an amendment for the sentence to make sense.  It would only be logical and sensible to say that “sufficient sellers existed  …… to sell all 3,000 shares”, or “sufficient buyers existed …… to buy all 3000 shares”.  The amendment takes the latter form.

8.If there is an admission, it must be an admission of a piece of fact.  A withdrawal of admission must be a withdrawal of an admission of fact.  But “sufficient buyers existed to sell …… all 3,000 shares” cannot and does not exist as a piece of fact, because buyers do not sell.  Hence there cannot be any withdrawal of an admission, because the Defendant, on its pleading, has not made any admission of fact.  The amendment to paragraph 10 is required so as to make it sensible.  The amendment must reflect what the Defendant, and not the Plaintiff, intended to put into the defence.  According to the Defendant, what was intended in the original paragraph 10(1) was “an admission that there were generally buyers of at least or more than 3,000 Gemstar shares at US$75 or better on that day.”

9.The Plaintiffs argue that if the application for amendment is allowed, they would suffer prejudice, because they can only rely on proof by deduction/inference by relying on a certain trading report rather than direct proof that would have gleaned from screen-shots of the trading conditions on 3.11.2000.  The former is less forceful than the latter.  Back in 2002, full dealing records (in particular screen-shots) in respect of the trades in Gemstar shares on 3.11.2000 could have been available to enable the Plaintiffs to prove the issue conclusively without the necessity of making inferences or deductions.  However, such screen-shots relating to the trades in Gemstar shares on 3.11.2000 are no longer available, but could have been available back in the end of 2002 when the Defence was filed.  Without the screen-shots, the Plaintiffs are considerably more restricted in terms of evidentiary material available to them to prove the issue in question.  It would be grossly unfair if the Plaintiffs are left to suffer the effects of an evidentiary impediment just because the Defendant has chosen to withdraw an admission after a gross delay of 7 years.

10.The burden is on the Plaintiffs to prove their case, and it is up to them to gather all the available evidence at the material time.  They were under the misapprehension that the Defendant made an admission in the defence, when in fact it could not and did not do so.  The prejudice, if any, cannot be caused by the Defendant, but caused by their own misapprehension of paragraph 10(1) of the defence.  The green shots were not available a long time ago.  So whether the amendment is allowed or not, it cannot make any difference.  It is not that because the application is allowed, then the green shots are not available.  They were no longer available, when the Defendant applied for the amendment.  Accordingly the argument that they will suffer prejudice cannot be sustained. 

11.For the reasons stated above, I adjudge that the order made by Master Lee is correct.  Accordingly I dismiss the Plaintiffs’ appeal.

Costs

12.I make an order nisi, to be made absolute in 14 days’ time, that the Plaintiffs do bear costs of this appeal, to be taxed, if not agreed, with certificate for Counsel.

The Plaintiffs:      represented by Miss Sarah Tong, instructed by M/S. Robertsons, Solicitors.

The Defendant:   represented by Mr. Roger Beresford, instructed by M/S. Jones Day, Solicitors.