FORM PASS LTD v. CHONG PAK CHIU

HCA574/2002

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

ACTION NO.574 OF 2002

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J U D G M E N T

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1. I have an application before me for amendment of the pleading and this is at the beginning of a trial which has been fixed some time ago. The proposed amendment is to add paragraph 10(a) of the Defence to Counterclaim which reads :

"Paragraph 23 of the Counterclaim is denied because the money drawn on the bank account of Kin Yip by the 1st and 2nd Defendants was due to business transaction and settlement of debt for goods sold and delivered."

2. It is to be noted that the main dispute, that is now before this court, is by Mr Chong Pak Chiu ("Mr Chong"), the plaintiff in the counterclaim, against Form Pass Limited and Mr Leung Kwok Hung ("Mr Leung"). The case of Mr Chong is that large sums of money, totalling well over $5.5 million pleaded in paragraph 23 of the counterclaim (at page 17 of the bundle), consisting of 16 cheques in the name of Form Pass Limited (totalling $5 million), one cheque in the name of Mr Leung (for the sum of $169,000 odd) and five cheques in cash (totalling $500,000) were all withdrawn from the bank account of Kin Yip and received by Form Pass Limited and Mr Leung.

3. It is not in dispute that these sums had been paid out and had been received by the defendants in the counterclaim. The burden therefore is squarely on the defendants to justify these payments in order for any trial to proceed. Any allegation that these payments had been received legitimately for a legitimate purpose, and/or with the agreement and/or with the knowledge of Mr Chong, must be clearly pleaded and clearly particularized. Now this was obviously not done. There was merely a general denial, and that general denial can be seen in paragraph 10 of the Defence to Counterclaim :

"Paragraphs 23 to 25 of the Counterclaim are denied. The 2nd Defendant avers that in fact the Defendant had made complaints to the Independent Commission Against Corruption ('ICAC') and Police alleging 2nd Defendant misappropriate his money. But after investigations of ICAC and Police, these complaints were found groundless."

4. So far as paragraph 10 is concerned, there was no allegation (no positive allegation and that is what it comes down to as the defendants are relying on a positive allegation) that these payments, although admittedly received, were for legitimate purposes, were with the specific knowledge and consent of Mr Chong. It is said to me that in the Witness Statement you can find the material. But first of all, in the Witness Statement you cannot find all the material. Secondly, even if the Witness Statement contained some material, that is not sufficient. The pleadings must contain the proper allegations. It is for the pleadings to define the scope of the dispute, not the other way round.

5. At this late stage, instead of picking up the hint of the court that the defendants are in a terrible position, and if they wish to proceed on the basis that they said - they would like to proceed, that is, to challenge Mr Chong's allegation and to say that all these payments were perfectly legitimate and with knowledge, so on and so forth - and there are 22 different payments; instead of picking up the court's hint and come up with an appropriate amendment, and then seek the leave of the court to grant the amendment at this late stage, possibly on terms, what I have is the proposed paragraph 10(a) which I have just read out. The proposed amendment is totally inadequate in the circumstances.

6. In the Kettlemen case of the House of Lords, it has been clearly stated that this is now a different regime and that at the trial or at a late stage of proceedings, the court would not tolerate amendments that in the old days would be granted when the courts were much more lenient towards amendments for various reasons. The times have changed, and now it is the pressure on the court or the pressure on litigants and amendments often are not allowed which could have been made or should have been made a long time ago. So I have not the slightest doubt that in this case paragraph 10(a) of the proposed amendment must be rejected, and therefore the application of the defendants to amend the Defence to Counterclaim is dismissed with costs.