RB INTERNATIONAL INVESTMENTS ASIA LTD AND ANOTHER v. APAC INVESTMENT HOLDINGS LTD AND OTHERS

HCA 2635/2016

[2019] HKCFI 2922

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

ACTION NO 2635 OF 2016

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DECISION

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Introduction

1.  By a summons filed on 12 September 2019 (“the Summons”), the Defendants (“Ds”) applied for leave to re-re-amend their Re-Amended Defence in the manner as shown in the draft (“the Draft RRAD”) annexed to the Summons.  The Plaintiffs (“Ps”) opposed the Summons. 

2.  I heard the Summons substantively today.  My decision is to make the following orders: -

(1)     Leave be granted to Ds to re-re-amend their Re-Amended Defence in the manner as shown in the Draft RRAD, save that the proposed amendments as shown in paragraph 3C(b) of the Draft RRAD be disallowed;

(2)     Unless Ds file and serve the signed version of their Re-Re-Amended Defence, revised pursuant to paragraph (1) above, together with its signed Statement of Truth, by 4:00 pm on 6 December 2019, the leave granted be revoked without further order, and Ds be barred from amending their pleading in this action;

(3)     Leave be granted to Ps to make consequential amendments to their Reply within 28 days from their receipt of the signed version of Ds’ Re-Re-Amended Defence, revised pursuant to paragraph (1) above, together with its signed Statement of Truth;

(4)     Costs of the Summons, including all costs previously reserved, up to and inclusive of today’s hearing, summarily assessed by me with Certificate for Counsel at HKD 280,000 be paid by Ds to Ps, forthwith;

(5)     Save as above, all costs of and occasioned by the Summons, including Ps’ costs of making consequential amendments, be paid by Ds to Ps in any event, to be taxed if not agreed. 

         (Collectively, “the Decision”). 

3.  My reasons for the Decision are as follows. 

Background Facts

4.  The 1^st Plaintiff (“P1”) was a Malaysian company.  The 2^nd Plaintiff (“P2”) was P1 suing in its capacity as an assignee of a Hong Kong company (“RBHK”).  The 1^st Defendant (“D1”) was a Samoa company.  The 2^nd Defendant (“D2”) was a BVI company.  The 3^rd Defendant (“D3”) was a shareholder of D1 and a director of D2. 

5.  In 2013, RBHK paid USD 20 million to D1 as consideration for some convertible notes.  P1, RBHK and D1 then executed a Chinese deed (“the Deed”) to replace the parties’ original arrangements in relation to those convertible notes.  It is Ps’ case D1 acted in breach of the Deed, and it was D2 and D3 who induced D1 to do so.  On, inter alia, that basis, P1 and RBHK commenced this action against Ds on 11 October 2016 and sought various reliefs.  P2 was made a party to this litigation in place of RBHK by an Order of Master Lai dated 5 July 2019. 

6.  Ds filed the first version of their Defence on 20 January 2017, amended it on 3 November 2017, re-amended it on 15 April 2019, and now seek to re-re-amend it. 

Ds’ Submissions

7.  Mr Jeremy Cheung, Counsel for Ds, submits, inter alia, that (1) this Court is, in general, “invariably inclined” to allow amendments in the absence of any risk that milestone dates may have to be moved, and in the absence of prejudice to the other parties, etc; and (2) there should thus be an order in terms of the Summons. 

Ps’ Submissions

8.  Mr Norman Nip, Counsel for Ps, submits, inter alia, that (1) the correct guiding principles on the exercise of discretion to allow or refuse an amendment post-CJR remain those laid down by the House of Lords in Ketteman v Hansel Properties Ltd [1987] AC 189, as approved in Topwell Corp Ltd v Kwan Kam Kee [2014] 5 HKLRD 1 at §39 (Kwan JA, as Kwan V-P then was); (2) Ds’ proposed amendments are irrelevant or immaterial in the resolution of the dispute between the parties and/or delaying tactics; and (3) the Summons should thus be dismissed with costs. 

My View

9.  In my view, I should examine each proposed amendment and rule accordingly.  Having done so, my view is that some, but certainly not all, of Ds’ proposed amendments should be allowed. 

10.  The proposed amendments to paragraphs 1A and 2 involve Ds crossing out cases they no longer wish to run, for greater clarity. I should allow them to do so.  The proposed amendments to paragraph 2A involve Ds inserting an allegation of knowledge against P.  I should also allow Ds to do so. 

11.  For the proposed amendments to paragraph 3C(b), relevance has not been shown by Ds.  They involve an allegation that D1 signed a deed with a corporation called Twelve Dragons Limited, but no allegation that P1 or RBHK was in any way aware of it at the material time.  I should disallow Ds from inserting them, as inserting irrelevant allegations into a pleading would be contrary to the underlying objectives in Order 1A rules 1(a) and (b) of the RHC. 

12.  Then we have paragraph 6, where Ds seek to recite the text of 3 clauses and call them “material terms”. Whilst I can see no necessity in the proposed amendments, it seems to me that allowing Ds to insert these averments would cause no harm either because the clauses in question are agreed.  I allow Ds to insert these averments. 

13.  For paragraph 7(b), Ds seek to insert an allegation of intention which, whilst unnecessary, appears to me to be harmless as well.  I allow Ds to insert that allegation.

14.  Paragraph 11(c) is more controversial.  Ds seek to introduce amendments to refer to a series of email correspondence.  It is debatable whether these averments should be treated as particulars (which would be permissible) or evidence (which would be impermissible).  On balance, I believe it would be more prudent to allow Ds to insert these averments.  

15.  The rest of the proposed amendments have not been objected to specifically or are harmless.  I allow Ds to make them. 

16.  As to Ps’ concern that this amendment exercise is just Ds’ plot to delay the effective and efficient resolution of this action, I share the same concern but take the view that the better solution is to impose a tighter time frame, and to make sure my costs orders adequately take into account Ds’ conduct vis-à-vis the timing of the Summons.   

Costs

17.  This action was commenced on 11 October 2016. Ds did not take out the Summons until 12 September 2019.  No acceptable reason on the timing had been provide by Ds.  Further, while I have not accepted all of the points made by Ps, given the lateness of the Summons and the way the Draft RRAD was drafted, it was reasonable for Ps to have opposed the Summons in the manner as they did.  That being the case, all costs of and occasioned by the Summons should be paid by Ds to Ps. 

18.  On the question of Certificate for Counsel, in my judgment it was reasonable, necessary and proper for both sides to engage Counsel to argue the Summons.  I certify the attendance of Counsel. 

19.  The more difficult question is whether costs should be in any event, or forthwith. 

20.  I have carefully considered what Lam J (as Lam V-P then was) had said in Midland Business Management Ltd v Lo Man Kui (No 2) [2011] 2 HKLRD 667.  In my view, for this particular case, considering the likely effect of Ds’ repeated applications for amendments on Ps’ cash flow, costs of the Summons up to and including today should be made payable by Ds forthwith and be summarily assessed by myself, while costs to be incurred by Ps in the future by reason of the Summons (including but not limited to Ps’ costs of consequential amendments, etc) should be made payable by Ds in any event, to be taxed if not agreed. 

21.  On the quantum of costs for summary assessment, Ps claim HKD 306,238.25.  Pursuant to Practice Direction 14.3, I examined each item in Ps’ Statement of Costs, and also the final figure.  I allow Counsel’s Fees in full.  Various items in Section D are, however, slightly excessive.  Taking a broad-brush approach, I consider a total sum of HKD 280,000 to be fair and reasonable. 

Final Remarks

22.  I do thank both Counsel for their most able assistance.