GOOD YEAR IMPORT AND EXPORT v. YIU FUNG COLD STORAGE AND WAREHOUSING LIMITED AND ANOTHER

H. C. A. No 4957/1980

IN THE SUPREME COURT OF HONG KONG

HIGH COURT

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JUDGMENT

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1. This is an appeal against a master's decision granting the Plaintiff leave to re-amend its statement of claim. The 2nd Defendant opposed that application on the grounds that the re-amendment is a new claim, brought solely against the 2nd Defendant, and based on an allegation of fraud which had not previously been pleaded. It was not an amended claim but was a completely fresh one based on vague grounds and, coming some 51/2 years after the original claim was filed, it should not be allowed as it is unjust to the 2nd Defendant to do so at this stage.

Background

2. The Plaintiff's original claim was that the 1st Defendant owned a godown into which the Plaintiff put frozen meat in exchange for warrants. It was a condition of storage that delivery should only be made on surrender of the appropriate warrant or production of a delivery order endorsed by Mr. Chen Hon Fai, proprietor of the Plaintiff firm. However meat had been delivered to the 2nd Defendant between 26th March 1970 and 26th April 1970 without the surrender of such warrants or production of delivery orders and "the Defendants have converted the goods to their own use". This allegation was made against both Defendants.

3. The Plaintiff applied under Order 14 for summary judgment against both Defendants but that application was refused on the 16th of December 1980. Both Defendants were given leave to defend.

4. In May 1981 an amended statement of claim was filed and the claim was discontinued against the 1st Defendant. The claim against the 2nd Defendant was that it had failed to pay for meat sold to it by one To Kim Shing, the Plaintiff's then manager. It was a straight-forward claim in contract of failure to pay for goods received.

5. The 2nd Defendant filed a defence on 28th May stating that it had paid for the meat supplied and counterclaimed in respect of orders alleged to have been placed with the Plaintiff but not filled. To that the Plaintiff filed a reply and defence on 21st July 1981.

6. Nothing then happened between the parties until the 29th April 1982 when a Notice of Intention to Proceed was filed by the Plaintiff. Again, however, no action was taken and on the 31st March 1953 there was another Notice of Intention to Proceed. The Plaintiff changed his solicitors in May 1983 but again nothing was done until 15th October 1985 when it again changed its solicitors who filed a third Notice of Intention to Proceed. Lists of documents were exchanged in January 1985 and in December 1985 the Plaintiff issued a summons for further directions seeking leave to re-amend its claim. That re-amendment was to the effect that To Kim Shing and Susan Choi, an employee of the 2nd Defendant firm, had conspired together to defraud the Plaintiff. The re-amended claim sets out that To is alleged to have employed Mr. Chan Kwok Hung as the 2nd Defendant's business supervisor, with Susan Choi's agreement, and instructed Chan to sell the Plaintiff's goods to the 2nd Defendant at below market price.

7. What had been a simple claim for non-payment, as alleged in May 1981, had become a claim based on an alleged fraudulent conspiracy between To and Choi.

8. In the re-amended statement of claim the following allegations are made as regards the 2nd Defendant, acting through Susan Choi:

9. These are the only overt acts alleged against the 2nd Defendant and, apart from events of 28th April, came from a statement made by Chan Kwok Hung to the Commercial Crimes Bureau in September 1980 which has been exhibited. So far as the 2nd Defendant is concerned the only part of that statement which seems to implicate it in any fraud was that To Kim Shing used a desk at irregular times in its office and Susan Choi was present when he was interviewed by To Kim Shing. The allegation in the re-amended statement of claim that To signed some of the 2nd Defendant's documents is not supported in that statement, Chan in fact says he did not know anything about To Kim Shing's documents.

Decision

10. The general principle regarding amendment of a claim is that it should be normally allowed at any stage so the real issue between the parties is brought before the Court, provided no injustice is done to the other party which cannot be remedied by an award of costs. If the amendment raises a new issue it must not circumvent the Limitation Ordinance.

11. The question here is whether the proposed re-amendment will cause any such injustice. The Court has a wide discretion in matters of this sort and should look at all the circumstances involved, including the period since the bringing of the original claim and the nature of the new allegations made.

12. Here the 2nd Defendant has for 5½ years thought that it faced a claim in contract, a failure to pay its debts. For long periods the claim seemed to have been abandoned but was twice revived. It was again resurrected in October 1984 but still no prompt action was taken between January and December 1985. Allegations of the most vague nature are now made of To, the Plaintiff's own manager, and Choi being seen and working together, not entirely surprising as there is no denial that they were doing substantial business, albeit on the Plaintiff's case dishonestly. There is no list of overt acts relied on by the Plaintiff and I consider that it is difficult indeed for the 2nd Defendant to see what is the case it has to meet on the re-amended claim. Members of its staff, and in particular Susan Choi if she is still in its employ, will have to try and remember minor events which are alleged to have occurred almost 6 years ago.

13. The Plaintiff's proprietor, Mr. Chen Hon Fai in an affidavit has detailed the reasons why there has been such delay in this matter and blames his two former solicitors, Messrs Ho and Wong and Deacons. It may be that he has not been well treated by either though neither has been given an opportunity to reply. That is however not the fault of the 2nd Defendant and I consider that to allow the re-amendment at this stage would be to cause injustice to the 2nd Defendant.

14. The appeal will be allowed to the extent that the Plaintiff 's application to re-amend its claim is refused.

15. I will hear Counsel as to any other order.