Wda Architects Ltd v. Mhs Planners, Architects & Engineers and Another
Read the full judgment text of CACV 116/2014 on BabelCite. This Court of Appeal judgment was delivered on 21 July 2015 before Kwan JA, Chu JA and McWalters JA.
Civil procedure – amendment of pleadings – leave to re-amend writ and statement of claim – limitation period expired – O 18 r 15(2) – whether re-amendments within purview of indorsement of claim – O 20 r 5(5) – whether new cause of action arises out of same or substantially same facts – architectural services – Hong Kong Jockey Club refurbishment project – plaintiff retained as lead consultant – defendants as sub-consultants – plaintiff sought to plead exclusive joint venture partnership – Court of First Instance judge dismissed most re-amendments and awarded $50,000 summary assessed costs against plaintiff – Court of Appeal allowed appeal – re-amendments not within purview of indorsement on writ – mere use of breach of contract insufficient to bring all contractual relationships within indorsement – new cause of action arose from same or substantially same facts – same documentation, conversations and conduct of parties – leave to amend indorsement and statement of claim granted – costs of appeal to plaintiff on order nisi – costs order in respect of disallowed amendments not varied
Legal issues: Whether re-amendments fall within purview of indorsement of claim · Whether new cause of action arises out of same or substantially same facts
Outcome: Appeal allowed; leave to amend indorsement of claim and to re-re-amend statement of claim granted
Cited by 5 cases · Cites 1 case
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CACV 116/2014 IN THE HIGH COURT OF THE HONG KONG SPECIAL ADMINISTRATIVE REGION COURT OF APPEAL CIVIL APPEAL NO 116 OF 2014 (ON APPEAL FROM HCCL NO 43 OF 2007) --------------------------
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------------------------ JUDGMENT ------------------------ Hon McWalters JA (giving the judgment of the court): Introduction 1.By a writ of summons dated 24 December 2007 the plaintiff sued for an account of profits as a result of alleged breaches of confidence and breach of copyright, together with orders for the payment of such sums of money as may be found to be due to the plaintiff consequent upon the taking of the account and for the return of confidential information and copyrighted material, and damages for breach of contract and conspiracy to injure the plaintiff’s business. 2.The plaintiff filed its Statement of Claim on 30 December 2009 and amended it, with leave, on 21 June 2010. 3.The defendants filed their defence and a counterclaim on 7 October 2011 to which the plaintiff replied and filed a defence on 17 November 2011. 4.By Summons filed on 22 April 2013 the plaintiff sought leave to file a Re-Amended Statement of Claim (“RASOC”) in terms of the draft attached to the Summons. It was common ground between the parties that the re-amendments, insofar as they sought to introduce new causes of action, were time barred and that leave to amend should not be granted unless any new causes of action arose out of the same or substantially the same facts as the causes of action in respect of which relief had already been claimed in the Amended Statement of Claim (“ASOC”). 5.This Summons was heard by Bharwaney J (“the judge”) on 17 January 2014 and the same day he gave judgment with reasons handed down on 11 March 2014. The judge dismissed a substantial part of the amendments sought by the plaintiff and ordered that the plaintiff pay forthwith to the defendants his summary assessment of costs of $50,000. 6.The plaintiff was granted leave to appeal the judgment of Bharwaney J by Lam VP on 23 May 2014. 7.The appeal was heard on 10 February 2015 and at the conclusion of the hearing we reserved our judgment which we said we would hand down at a later date. This we now do. The ASOC 8.The plaintiff is a company incorporated in Hong Kong and carries on the business of a firm of architects. The 1st defendant is a company incorporated in Japan and carries on the business of a firm of architects in Japan and Hong Kong. The 2nd defendant is a subsidiary of the 1st defendant and was incorporated in Hong Kong and carries on the business of a firm of architects in Hong Kong. 9.In September 1998 the plaintiff was invited by the Hong Kong Jockey Club (“HKJC”) to submit a fee proposal for a feasibility study of the refurbishment of the HKJC’s public race stands at its racecourses. The plaintiff was shortlisted for this job and in December 1998 the plaintiff was invited by the HKJC to compete for a master planning assignment for the refurbishment of the public racecourse stands. 10.The ASOC then asserted that around the same month, December 1998, the plaintiff and the 1st defendant entered an agreement to jointly compete for jobs related to the refurbishment project and to this end they agreed they would have further discussions once the outcome of the bid was known. This agreement was evidenced by a Memorandum dated 18 December 1998. 11.By a letter dated 25 January 1999 the plaintiff quoted a lump sum fee for the master planning report and in the same letter introduced the 1st defendant as its special consultant. By a letter dated 5 August 1999 the HKJC appointed the plaintiff as the leading consultant to carry out the first stage of the master planning study. The plaintiff and the 1st defendant carried out the preliminary study and made two presentations to the HKJC in August and September 1999. 12.By letter dated 27 April 2000 the HKJC engaged the plaintiff, as leading consultant, and the 1st defendant to further develop the designs for eight high priority projects. One of these projects was to increase the viewing capacity of the parade ring at Shatin racecourse. 13.In order to have a presence in Hong Kong the 1st defendant incorporated the 2nd defendant in 2000 and established an office for it. 14.Paragraph 13 of the ASOC asserts that on or about 21 December 2001 a contract was entered into by the HKJC and the plaintiff “whereby the plaintiff in consultation with the 1st defendant” was appointed to carry out the high priority projects other than the parade ring project for which it was to provide a feasibility study. 15.During 2001 and 2002 the plaintiff and the 1st defendant liaised with one another over the parade ring project, principally over the schematic design for it which was prepared by the plaintiff. 16.Paragraph 15 of the ASOC pleads that by a letter dated 12 March 2002 the plaintiff appointed the defendants to provide special consultant services for the 21 December 2001 contract that the plaintiff had entered into with the HKJC. The projects under this contract were undertaken by the plaintiff as the leading consultant with the defendants acting as sub-consultants. 17.Between July 2002 and January 2003 various discussions took place between the plaintiff and the defendants concerning the parade ring project “on the basis that the parties would jointly provide architectural services to HKJC”[1] and in the course of these discussions confidential information was imparted by the plaintiff to the defendants. This confidential information was communicated to the defendants “for the sole and limited purposes of enabling the parties jointly to provide architectural services to the HKJC in relation to the Parade Ring Project and of negotiating an agreement to be entered into between the HKJC, the plaintiff and the defendants (as joint venturers) in relation to the Parade Ring Project, and for no other purposes.”[2] 18.In these circumstances, it is asserted that the plaintiff and defendants were in a fiduciary relationship as joint venturers. Alternatively, it is said in paragraph 19 of the ASOC that it is to be inferred that a contract was made between the plaintiff and the 1st defendant and/or the 2nd defendant whereby in consideration of the plaintiff acting jointly with them, they agreed to refrain from exploiting any business opportunities or conducting any business with the HKJC without the involvement of the plaintiff. 19.In mid-2002 the defendants entered into secret negotiations with the HKJC in respect of the parade ring project without the involvement of the plaintiff. The defendants subsequently entered into a contract with the HKJC to undertake the parade ring project as project manager and lead consultant with another architect firm engaged as the authorised person. The RASOC 20.Not all the re-amendments sought by the plaintiff and refused by the judge are under appeal. We shall, therefore, refer to only those re‑amendments still being contested. 21.The first set of re-amendments are contained in new paragraphs 10A, 12A and 12H of the RASOC. The paragraphs assert that in or about May or June 2000 there were further discussions between the plaintiff and the 1st defendant with regard to the terms on which the work for developing the designs for the eight high priority projects would be carried out. The agreement between them was made partly in writing, namely as per the agreement of 7 August 1999 as amended by a letter dated 12 March 2002, and partly by conduct by carrying out the work, both before and after the plaintiff contracted with the HKJC on or about 21 December 2001. 22.This agreement constituted an exclusive joint venture partnership agreement between the plaintiff and the defendants in Hong Kong for the HKJC projects. Alternatively, the plaintiff asserts that a joint venture partnership agreement arose by reason of the conduct of the parties set out in the existing paragraphs 2 to 12. 23.Paragraph 13 of the ASOC refers to the appointment of the plaintiff by the HKJC to carry out the high priority projects and refers to “the plaintiff in consultation with the 1st defendant” being appointed. In the RASOC this was changed to:
24.Paragraph 13 was further re-amended to plead the existence of an agreement that was copied by the plaintiff to the 1st defendant in a letter dated 12 March 2002 and whose terms mentioned the appointment of the plaintiff in partnership with the 1st defendant. This agreement was pleaded in paragraph 15 of the ASOC which describes the defendants being:
25.In the RASOC paragraph 15 simply pleads that by the plaintiff’s letter of 12 March 2002:
26.A new paragraph 15A is included in the RASOC by which the plaintiff pleads that the meaning of the joint venture partnership agreement was that neither party would seek or accept any work from the HKJC in connection with or related to the projects “save in joint venture and/or partnership with the other and/or with the involvement of the other and/or with the consent of the other.” The judgment of Bharwaney J 27.After setting out the procedural background and summarising the facts pleaded by the plaintiff in the ASOC the judge briefly described the re-amendments sought as a prelude to his discussion of the legal principles applicable to the issue that called for his determination. 28.The judge referred to section 35(2) of the Limitation Ordinance, Cap 347 and the meaning to be given to the term “a cause of action”. He then noted that Cap 347 prevented the limitation provisions from being circumvented unless rules of court so provided. The Rules of the High Court, in the form of O 20 r 5, do in fact so provide. The judge then referred to the various sub-rules of rule 5 and concluded:
29.The judge then discussed the principles underlying the application of the test of arising out of the same, or substantially the same facts. No point is taken on his statement of these legal principles. 30.In applying these legal principles to the plea of an exclusive joint venture agreement the judge concluded that the new cause of action arose not out of the same or substantially the same facts but out of new facts pleaded in the proposed re-amendment. He said:
31.The judge recognised that the ASOC contained an averment that the arrangements between the plaintiff and the defendants were that of joint venturers but nevertheless concluded that notwithstanding this pre‑existing averment, “the new cause of action is based substantially on the new facts pleaded in the proposed re-amendments, and does not arise from the same facts, or substantially the same facts, pleaded in the amended statement of claim.” The new averments in paragraphs 10A to C and 12B to 12G in the draft RASOC placed before the judge are dropped in the draft RASOC placed before us on appeal. 32.In respect of the amended paragraphs 13 and 15 and new paragraph 15A the judge noted that the new cause of action being pleaded relied entirely on the new facts pleaded in the RASOC and on the removal of any reference to the contractual obligation of the defendants being to provide consultancy services and to the nature of the relationship between the plaintiff and the defendants being that of lead consultant and sub‑consultants. 33.For these reasons the judge refused the application to re‑amend in respect of these areas of the ASOC. The grounds of appeal 34.There are only two grounds of appeal and each are, in effect, different sides of the same coin. The first ground of appeal asserts that the judge erred in holding that the amendments sought to be introduced under paragraphs 10A, 12A, 12H, 13, 15 and 15A of the RASOC were new causes of action which did not arise from the same or substantially the same, facts as pleaded in the ASOC. The second ground of appeal is that the joint venture partnership relationship and agreement between the plaintiff and 1st defendant overlap with the existing factual matrix in the ASOC and so do not introduce a new cause of action. Discussion 35.The defendants take the point, not taken below but not disputed by the plaintiff, that any amendment in the present circumstances is in fact a two step process. The first step is to determine whether the new claim is within the purview of the indorsement on the writ and therefore complies with O 18 r 15(2). O 18 r 15(2) provides:
The second step is to consider whether the amendments sought by the RASOC could be brought within O 20 r 5 which is the rule dealing with amendments to the writ or pleading with leave. The relevant power is contained in O 20 r 5(2) which enables a court to amend the writ or pleading notwithstanding the expiry of a relevant limitation period if the court “thinks it just to do so.” This provision must be read with O 20 r 5(5) which empowers the court to allow an amendment whose effect is to add a new and statute barred cause of action:
36.The defendants argue that the plaintiff’s amendments do not comply with O 18 r 15(2) and as they do not arise out of the same or substantially the same facts the plaintiff cannot bring itself within O 20 r 5(5). 37.Both parties agree that the relevant legal principles are those set out by the Court of Final Appeal in Moulin Global Eyecare Holdings Ltd v Olivia Lee Sin Mei (2014) 17 HKCFAR 466. The judgment of the Court of Final Appeal was handed down on 17 July 2014 and so the parties and the judge did not enjoy the benefit of it at the hearing of the plaintiff’s application. 38.The plaintiff contends that its amendments do not cause the statement of claim to be in breach of O 18 r 15(2) as its reformulated claim is still within the purview of the indorsement of the writ. Alternatively, it is said, if it is necessary for the plaintiff to amend the writ then such application under O 20 r 5(2) should be granted as the amendments to the statement of claim do not introduce a new cause of action. Rather, it is said, the amendments simply clarify that the relationship and agreement between the plaintiff and the 1st defendant was one of joint venture partnership, a fact which had already been pleaded in paragraph 17 of the ASOC. If the indorsement of the writ lacks particularity, the defect may be cured by the service of a statement of claim (Hong Kong Civil Procedure 2015, vol 1, para 6/2/2 citing Hill v Luton Corporation [1951] 2 KB 387). 39.Finally, the plaintiff argues in the further alternative that even if the re‑amendments do raise a new cause of action, it arises out of matters already pleaded and falls within the O 20 r 5(5) exception. 40.The defendants maintain that under Moulin principles the question of whether the re-amendments introduce a new cause of action falls to be determined by having regard to the indorsement on the writ and deciding whether the re-amendments are within the purview of the indorsement. If the re-amendments are within the purview of the indorsement then they are not statute barred. If they are not within the purview of the indorsement, as the defendants contend, then recourse must be had by the plaintiff to O 20 r 5(5). 41.The first question, therefore, is whether the re-amendments are within the purview of the indorsement on the writ. The indorsement on the writ is as follows:
42.The defendants argue that that this indorsement is defective as it is limited to only a summary of the relief sought and does not contain a “concise statement of the nature of the claim made”. This is the language of O 6 r 2(a) which requires that before a writ is issued it must be indorsed with a statement of claim, or, if the statement of claim is not indorsed on the writ “with a concise statement of the nature of the claim made or the relief or remedy required in the action begun thereby.” In its judgment in Moulin the Court of Final Appeal said that the word “or” in italics above should be read as “and”. Thus the indorsement should contain both a concise statement of the nature of the claim and of the relief or remedy being sought. 43.The defendants characterise the plaintiff’s indorsement as a relief only indorsement and for that reason says it is defective. The problem with such a writ, the defendants submit, is that because there are no facts in the writ concisely stating the nature of the claim the plaintiff are prevented from reformulating it. 44.What it is possible to ascertain from the plaintiff’s indorsement is that the claim is based on contract and that the nature of the contractual relationship gave rise to a duty of confidence owed by the defendants to the plaintiff in respect of information that the plaintiff passed to the defendants and that copyright subsisted in respect of some of the materials that the plaintiff passed to the defendants. But the indorsement otherwise reveals nothing of the nature of the contractual relationship and how the plaintiff was wronged by the defendants in respect of that contractual relationship. 45.The plaintiff’s argument is that:
46.Furthermore, the relief claimed and the duties breached that are set out in the indorsement are consistent with the form of the contractual relationship being a partnership. 47.We do not agree. The indorsement on the writ plays a very important role in informing the defendant of the parameters of the claim being made against him. In limiting the scope of the claim the indorsement operates in conjunction with O 18 r 15 as to what may be pleaded in the statement of claim. In his judgment in the Moulin case Gummow NPJ accepted as correct the proposition that “the indorsement marks out the perimeter or range of the area within which the plaintiff may express its claim in a formal fashion in the statement of claim whether as originally filed or as sought to be amended.”[3] 48.Additionally in conjunction with section 35 of the Limitation Ordinance it defines the period in which a defendant is exposed to civil liability for any legal wrong. Again, in his judgment in the Moulin case Gummow NPJ referred at paragraph 26 to the “significance attached to the indorsement” and “as a principal purpose of the indorsement [being] to stop the further running of limitation periods.” 49.To accede to the argument of the plaintiff would be to render meaningless the role played by the indorsement. The mere fact that the term “breach of contract” is used does not mean that every form of contractual relationship is brought within the purview of the indorsement. In our view, if a particular form of relationship is relied on by the parties which, because of its nature, gave rise to particular legal duties for breach of which the parties are exposed to particular forms of civil liability then the facts set out in the indorsement should be sufficient to enable it to be said that the particular relationship is within the purview of the indorsement. Here there were no such facts. 50.We are of the view, therefore, that re-amendments asserting a relationship of partnership are not within the purview of the indorsement. 51.It is now necessary to consider whether the indorsement of the writ can be amended under O 20 r 5(5). The amendment sought by the plaintiff was read out to the court in the course of the hearing. What is sought is an amendment to paragraph 4 of the indorsement so that it would now read as follows:
52.The first question the court must address is whether the effect of the plaintiff’s amendment is to add or substitute a new cause of action. This is an exercise that was conducted by the judge and his conclusions are set out earlier in this judgment. 53.In the original statement of claim paragraphs 5 to 13 were unaffected by the first set of amendments. Paragraph 5 of the ASOC pleads that the plaintiff and the 1st defendant agreed jointly to compete for the HKJC work but as to what form their future relationship would take would be deferred until after the outcome of the HKJC bid was known. This agreement was evidenced by a memorandum of 18 December 1998. 54.Paragraph 6 pleads that in a letter the plaintiff wrote to the HKJC the plaintiff introduced the 1st defendant as its special consultant. 55.Paragraph 7 refers to the plaintiff winning the bid and to the HKJC formally appointing the plaintiff as lead consultant to carry out the first stage of the master planning study. 56.Paragraph 8 avers that :
57.Paragraph 10 claims that on or about 1 February 2000 the HKJC engaged “the Plaintiff (as the leading consultant) and the 1st defendant to further develop the designs for 8 high priority projects.” Paragraph 10 goes on to claim that:
58.Paragraph 13 says that on or about 21 December 2001 a contract was entered into between the HKJC and the plaintiff “whereby the Plaintiff in consultations with the 1st Defendant was appointed to carry out the high priority projects at the HKJC’s racecourses (with the exception of the Parade Ring Project) …” 59.So far what is clear from the statement of claim is that when the plaintiff and the 1st defendant first linked up, the ultimate legal form of what their relationship would be was unclear. Nevertheless, they worked together with the plaintiff drawing upon the 1st defendant’s expertise. In dealings with the HKJC the pleadings suggest that the plaintiff took the lead and referred to the 1st defendant as its consultant. 60.That this was in fact the plaintiff’s relationship with the 1st defendant was made clear beyond doubt by paragraph 15 of the statement of claim which avers that by a letter dated 12 March 2002 the plaintiff appointed the defendants “to provide special consultant services” for the HKJC contract and the projects under this contract “were undertaken by the Plaintiff as the leading consultant with the Defendant acting as sub‑consultants.” 61.Then the amendments were made to the statement of claim. Paragraph 16 of the ASOC imported an obligation of confidence into the relationship in respect of information that passed between the parties in the course of their discussions on the Parade Ring Project. This duty of confidence is set out in greater detail in the new paragraphs 16A and 16B. Paragraph 16B avers that the confidential information was communicated to the defendants “for the sole and limited purposes of enabling the parties jointly to provide architectural services to the HKJC in relation to the Parade Ring Project and of negotiating an agreement to be entered into between the HKJC, the Plaintiff and the Defendants (as joint venturers) in relation to the Parade Ring Project, and for no other purposes.” 62.Paragraph 17 was amended to include reference to the plaintiff and the defendants as joint venturers. 63.So the contractual relationship that the parties presented to the HKJC was described in the statement of claim as that of lead consultant and sub-consultant. What this meant as between themselves was left unspecified and unclear. 64.The ASOC adds a gloss to this relationship by describing it as a relationship of joint venturers. The problem with this term is that, on its own, it can mean almost anything. In practical terms it can mean no more than just working together in a common enterprise. To give it legal meaning recourse would have to be had to conversations between the parties or to documentation they have signed in which they set out the legal nature of their relationship and the terms by which each party agreed to be bound. Up to the stage of the ASOC there was no special meaning that could be given to this term. It appears to be employed solely to give emphasis to the fact that the parties are working together on the projects flowing from the HKJC contract. 65.Up to this stage of the pleadings there is nothing to suggest that their relationship, vis-à-vis each other, is one of partnership. 66.Then comes the RASOC with its averment that the relationship between the plaintiff and the defendants was one of an exclusive joint venture partnership. Accommodating this new averment requires a change to paragraph 13 so that the reference to “the Plaintiff in consultation with the 1st Defendant” becomes “the Plaintiff in partnership with the 1st Defendant.” Paragraph 15 is amended by removing all reference to the defendants being appointed to provide special consultant services and all reference to the plaintiff being leading consultant and the defendants being sub-consultants on the projects undertaken under the HKJC contract. 67.When one traces the history of the relationship as pleaded in the statement of claim and then the ASOC and then compares that with what is now sought to be pleaded in the RASOC, together with the additional factual paragraphs that are required to underpin the new relationship, We are in no doubt that the averment that the parties were in an exclusive joint venture partnership does introduce a new cause of action. 68.The question then becomes whether this new cause of action can be brought within the exception provided by O 20 r 5(5). The relevant principles for determining whether the new cause of action arises out of the same facts or substantially the same facts as the cause of action originally pleaded are not in dispute and it is accepted were correctly set out in the judgment of Bharwaney J who explained the focus of the court’s enquiry as follows:
69.Even though the allegations in the RASOC go beyond the purview of the indorsement of claim and the averment of an exclusive joint venture partnership does raise a new cause of action, we are of the view that leave to amend the indorsement of claim and to re-re-amend the statement of claim should be given as the new cause of action can be brought within the exception in O 20 r 5(5), and the new cause of action “arises from facts which are the same as, or include or form part of, facts giving rise to a cause of action [mentioned in the writ]” as provided in O 18 r 15(2). We take the view that the indorsement of claim should be amended so that the pleading is brought within its purview. 70.Here, the plaintiff’s claim is based upon a contractual relationship that came into existence in December 1998 and whose legal form and terms developed between that date and January 2003. The truncated version of the new claim of joint venture partnership in the new RASOC does not seek to expand the period during which the legal relationship took shape and its terms were settled. The ASOC and the RASOC are ad idem that the form and terms of the legal relationship derives from written documentation between the parties and the conduct of the parties in this same period as already pleaded in the unamended statement of claim. 71.As the judge has recognised in paragraphs 39 and 41 of his judgment, “the facts pleaded in the amended statement of claim can be relied upon in support of the alleged exclusive joint venture partnership agreement” and “the averment that the arrangements between the plaintiff and the defendants, pleaded in the amended statement of claim, were that of joint venturers can be relied upon to support the new cause of action”. What the plaintiff’s legal advisers did in the new RASOC they placed before us was to remove all the averments in relation to new facts and to amend the facts pleaded in the ASOC which do not support the new cause of action of exclusive joint venture partnership, such as the description of the role of the plaintiff as the lead consultant and the defendants as sub-consultants. 72.In these circumstances we are of the view that the same evidence would be relied upon by the defendants in responding to the plaintiff’s new claim. That evidence may have to be reviewed in the light of what the plaintiff now claims was the actual legal relationship but it will be the same documentation and the same conversations between the parties and the same conduct of the parties as they carried forward their working relationship in this period. 73.We would, therefore, grant the application under O 20 r 5(2). Conclusion and orders 74.For the reasons given above, we allow the appeal and give leave to the plaintiff to amend the indorsement of claim in the terms as set out in paragraph 51 above and to re-re-amend the statement of claim as per the draft submitted to us in tab 10 of the appeal bundle. 75.We decline to vary the costs order of the judge who awarded costs to the defendants in respect of the amendments he disallowed. The draft amendments sought on appeal are a severely truncated version of the draft amendments placed before the judge having regard to the judge’s views in paragraphs 39 to 41 of his judgment. Further, we have allowed the appeal on the basis of a very different draft pleading without those averments which the judge found objectionable. 76.For the costs of this appeal, we would make an order nisi that the plaintiff is to have its costs against the 1st and 2nd defendants to be taxed if not agreed.
Mr Victor Joffe, instructed by Deacons, for the plaintiff Mr Paul Carolan, instructed by Weir & Associates, for the defendants [1] Paragraph 16 of the ASOC. [2] Paragraph 16B of the ASOC. [3] Moulin Global Eyecare Holdings Ltd v Olivia Lee Sin Mei (2014) 17 HKCFAR 466 at 482, paragraph 28(b). |
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