Winly Advance Co Ltd v. Chung Tin Sung and Another

HCA 2476/2007

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

ACTION NO. 2476 OF 2007

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Before:  Deputy High Court Judge L. Chan in Chambers

Date of Hearing: 16 July 2010

Date of Decision:   16 July 2010

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D E C I S I O N

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1.This is the plaintiff’s application to re-amend the amended statement of claim to plead against the 1st defendant a cause of relief along the lines of Ji Shan International Investment Limited v Resources Main Enterprises Limited and Another, FACV18/1998.

2.This is a claim by the plaintiff against the 2nd defendant for conveyance of two storeys of a small house built in Lam Tsuen, the New Territories under an agreement it made with the 2nd defendant.  The consideration from it to the 2nd defendant was the provision of labour and materials to build two small houses on two lots in Lam Tsuen.  The two storeys that it seeks from the 2nd defendant are in one of the two houses. 

3.The 2nd defendant is not the owner of the two lots on which the two houses are built.  The two lots are owned by the 1st defendant. 

4.The 2nd defendant has a contract with the 1st defendant to provide labour and materials to build the two houses.  He also had to pay some premium to the government for the 1st defendant.  In return, the 1st defendant would give him one of the two houses as built.  The two storeys that he agreed to give the plaintiff are in this small house. 

5.The net effect of this series of transactions is that the 1st defendant sold one small house to the 2nd defendant in return for payment in kind, namely, the building of two small houses and the payment of some premium to the government.  The 2nd defendant then sub-sold two storeys in one of the houses to the plaintiff, also for payment in kind, namely, the provision of labour and materials to build these two houses.

6.The plaintiff pleaded that it has completed the tasks under its contract with the 2nd defendant, but the 2nd defendant did not give it the two storeys.  It now claims against the 1st and 2nd defendants for the two storeys. 

7.The claim against the 2nd defendant has been settled.  The claim against the 1st defendant is ongoing.  The trial has been fixed on 3 to 5 August 2010.

8.The 1st defendant’s only ground of defence to the plaintiff’s claim is that there is no contract between the plaintiff and the 1st defendant.  There is no other ground of defence, either as against the 2nd defendant or as against the plaintiff.  There are also no pending proceedings between the 1st and 2nd defendants.

9.The re-amendment sought by the plaintiff will not necessitate further evidence or discovery on the part of the plaintiff. 

10.The defendant opposes the re-amendment on the ground that it will necessitate further discovery by the 1st defendant. 

11.Counsel for the 1st defendant said that the 1st defendant’s contract with the 2nd defendant is about the construction of two houses.  Without the re-amendment of the amended statement of claim, there is no need for the 1st defendant to plead the non-completion by the 2nd defendant.  The reason being that the duty to the 1st defendant to complete the works is on the 2nd defendant; hence it is not necessary and is improper for the 1st defendant to plead as against the plaintiff the non-completion of the 2nd defendant’s duties.

12.Now that the plaintiff claims or seeks to claim that it can subrogate into the shoes of the 2nd defendant, then it has to discharge the duties of the 2nd defendant.  Only if the re-amendment is allowed that the 1st defendant needs to plead the non-completion by the 2nd defendant as a defence to the plaintiff’s claim for specific performance. 

13.Furthermore, there is the need to make discovery by the 1st defendant in relation to the new claim of subrogation.  To be precise, the 1st defendant needs to make discovery on the 2nd defendant’s non-completion of duties owed to the 1st defendant if the re-amendment should be allowed.

14.I disagree.  The claim by the plaintiff against the 1st defendant for specific performance of the conveyance of the two storeys of the small house is already pleaded in the amended statement of claim.

15.Paragraph 3(ii) of the amended statement of claim pleads that the 1st defendant by virtue of his agreement with the 2nd defendant agreed to transfer title of the house on Lot 1405RP to the 2nd defendant in consideration of the 2nd defendant’s assumption of construction costs of the two village houses on the lots owned by the 1st defendant.

16.Paragraph 7 pleads that by an agreement dated 3 July 2006 between the 2nd defendant and the plaintiff, the 2nd defendant procured the plaintiff to construct the same two village houses on those two lots in consideration for the acquisition by the plaintiff of the legal and equitable title to the ground floor including the garden and the 1st floor of Lot 1405RP upon completion of the same.

17.Paragraph 8 pleads that the 2nd defendant is personally liable to the plaintiff in respect of the obligations under this agreement. 

18.Prayer for relief (1) prays for an order by way of specific performance of the agreement between the plaintiff and the 2nd defendant that both defendants do procure the transfer of the legal and beneficial title to the ground floor including the garden and the 1st floor of the house on Lot 1405RP to the plaintiff.

19.The amended statement of claim also contains a mass of details on the construction of the two houses by the plaintiff.

20.With all these matters pleaded in the amended statement of claim, the claim for direct performance between the plaintiff and the 1st defendant is already there.

21.If the 1st defendant has any ground of defence to the effect that the 2nd defendant has defaulted in his agreement with the 1st defendant, the 1st defendant should have pleaded the same in his defence to contrast the details on the construction as pleaded by the plaintiff.  If the 1st defendant should have chosen to rely on the lack of direct contractual relationship with the plaintiff as his sole ground of defence, it is a matter for him. 

22.As I see it, the claim for direct conveyance of the two storeys by the 1st defendant to the plaintiff is already there regardless of whether the pleader did intend to so plead.  The re-amendment now sought by the plaintiff has ameliorative effect, but it does not create a new cause of action. 

23.However, I would not allow paragraph 17A(i) of the proposed re-amendment as the plaintiff seeks conveyance to it of the whole small house that the 2nd defendant would have entitled to.  I also delete the corresponding relief.  Consequential correction would be required in the engrossment.

24.Since the 1st defendant has no other objection to the proposed re-amendments as revised, I would allow them.

25.I also give leave to the 1st defendant to amend his defence within seven days from today, with Sunday and public holiday to be included. 

26.If the 1st defendant should now find the need to make discovery on the 2nd defendant’s default in his contract with the 1st defendant, then the 1st defendant may consider doing so in the limited time available.

27.Costs of and occasioned by the amendment save the costs of the argument be to the 1st defendant and the costs of the argument be to the plaintiff with certificate for counsel.

Mr Jenkin Suen, instructed by Messrs Foo & Li, for the Plaintiff

Mr Vincent Lam, instructed by Messrs Donald Yap, Cheng & Kong, for the 1st Defendant