LEE KOK CHE AND OTHERS v. ROYAL MORTGAGE LTD AND OTHERS

HCA 1308/2015

[2022] HKCFI 3500

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

ACTION NO 1308 OF 2015

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(By Original Action)

(By Counterclaim)

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DECISION

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1.  This is the 4^th Case Management Meeting for the trial set down by Lok J on 30 July 2021 to be heard from on 8 February 2023, with a total of 10 days reserved.

2.  Mr Valentine Yim and Ms Vivian Chan appeared for the Plaintiffs (“Ps”).  Ms Yvonne Leung appeared for the 1^st Defendant (“D1”).  Ps and the 2^nd Defendant (“D2”)  have settled.  The other defendants (“D3” to “D8”), who are the same as the counterclaiming plaintiffs, are corporate entities which for various reasons (for examples having been dissolved but restored for purposes otherwise than in relation to this action)  are currently not taking active part in the proceedings. 

The claim and the defences in summary

3.  Ps’ claim is for a right of way over a stretch of road.  It serves 5 lots of land owned or used by them (the “Five Lots”, and those of the Five Lots occupied by P3 being the “Workshop Lots”).  The subject stretch of road has been called the “Suit Access Road”, and has been marked for identification purpose on the schedules annexed to Ps’ pleadings.  It runs along and via inter alia various lots of lands registered in the names of various defendants.  D1 is now the mortgagee in possession of those lots.  Those lots have been collectively referred to as the “Suit Land”.

4.  Ps seek a declaration that the predecessors-in-title of the Suit Land have dedicated the Suit Land as a public highway which dedication have been accepted to members of the public and consented to by the Government.  They alternatively rely on the doctrine of lost modern grant.  

5.  D3 to D8 have filed a Defence and Counterclaim.  They plead, relevantly, as follows:

(a)  the use of the Five Lots by Ps for residential and industrial purposes has amounted to a radical change in the character of the Five Lots from their previous user for agricultural purpose (§22 and the Particulars thereunder);

(b)  Ps’ actual use of the Workshop Lots are in breach of the terms of Ps’ application for planning approval as approved by the Director of Planning and in breach of the conditions of a short term waiver (the “Short Term Waiver”)  which Ps received from the District Land Office Yuen Long (Particulars (q)  under §22 (“Particulars 22(q)”));

(c)  the use of the Suit Access Road by Ps has resulted in a substantial increase or alteration in the burden on the same (§23 and the Particulars thereunder);

(d)  the use at the material times of the Suit Access Road was subject to the express consent of D3 to D8’s predecessors-in-title (§24 and the Particulars thereunder);

(e)  since no later than May 2008, D3 to D8’s predecessors-in-title had openly been objecting to Ps’ use of the Suit Access Road over the lots owned by D3 to D8 (§25 and the Particulars thereunder);

(f)  even if any right of way over the Suit Access Road had been established, it has as a result been extinguished (§26).

6.  D1 has also filed a Defence, principally adopting and relying on the defences raised by D3 to D8.

Ps’ application to amend

7.  On 5 October 2022, Ps took out a summons for leave to amended their pleadings as per the draft attached thereto (the “Pleadings Summons”). Subsequently on 18 October 2022, Ps took out another summons to amend the Pleadings Summons (the “Amendment Summons”).  The drafts attached to the Pleadings Summons are proposed thereby to be revised.  The end results are that Ps are seeking to, relevantly, (1)  amend their Re-amended Statement of Claim as per the draft Re-Re-amended Statement of Claim attached to the Amendment Summons (the “Draft RRA-SOC”); and (2)  amend their Amended Reply to D3 to D8’s Defence and Defence to D3 to D8’s Counterclaim as per the draft also attached to the Amendment Summons (the “Draft RA-D&C”). 

8.  I have considered the various authorities cited to me in relation to the legal principles and considerations applicable to an application for amendments.

9.  The Pleadings Summons is no doubt issued late.  The main explanation put forward[1] for that is that there are matters in the witness statement of Li Kwok Wai of 9 September 2022 (filed by D1)  which have not previously been pleaded, and Ps need to respond to them.  In relation to the Amendment Summons, it is said that after the filing of the Pleadings Summons, and as a result of correspondence between the parties, a further review was conducted over the draft amendments proposed at that stage, after which further revisions were deemed necessary.

10.  D1 objects.  The main reasons for the objection, as put forward by Ms Leung, are (1)  the lateness of the application, (2)  the need to vacate the trial dates if the proposed amendments are allowed, and (3) irreparable prejudice to D1 upon such eventuality.

11.  Whilst D1 objects, its objection is confined only to:

(a)  In relation to the Draft RRA-SOC, the proposed amendments in §18(3)  and (4), and the relief section;

(b)  In relation to the Draft RA-D&C, the proposed amendments in §§4(2)(e)(i), 20A, 50A(1)  & (2)(c).

12.  The proposed amendments to §18(3)  and (4)  of the Draft RRA-SOC, and §§4(2)(e)(i), 50A(1)  & (2)(c)  of the Draft RA-D&C relate to the time when constructions works were first carried out on the Workshop Lots (and hence when D3 to D8’s predecessors-in-title would have knowledge about them).  Ps say they were proposed to be made to correct a factual error.  D1 points to the existing pleadings and the lateness of the application, and says that it “has every reason to be suspicious of the actual commencement date of the construction of the workshop buildings”.

13.  D1 is at liberty to test the evidence at trial to see whether it can confirm its suspicion.  That by itself is not sufficient for this court to refuse the related amendments.  In my view, D1 is not prejudiced by those proposed amendments, which I hold are necessary for fair disposition of the cause.

14.  The relief section of the Draft RRA-SOC relates to an issue as to whether the Suit Access Road comprises any part of Lot 1615.  Ms Leung complains about a number of changes of heart by Ps as to whether the pleaded definition of the Suit Access Road should be amended.  In the end, the amendment to the relief section are proposed so as to carve Lot 1615 out from the Declarations sought.  I do not see that being prejudicial to D1. 

15.  In relation to the proposed amendment to §20A of the Draft RA-D&C:

(a)  I have summarized the effects of §22 and Particulars 22(q)  of D3 to D8’s Defence and Counterclaim.  Amongst other matters, breach of the Short Term Waiver has been pleaded;

(b)  In Ps’ Amended Reply to D3 to D8’s Defence and Defence to D3 to D8’s Counterclaim (originally filed on 8 December 2015, and amended on 22 December 2015), §20 specifically denies Particulars 22(q).  The specific denial is supported by a number of averments pleaded in §§20(1)(a)  & (b), and 20(2)(a)  to (d);

(c)  A new §20A is now proposed to be added as further reply to Particulars 22(q).  Amongst the proposed additions, Ps proposed to plead that “the construction of the two Factory Buildings was only commenced in about mid-October 1992, which was after the formal grant of the Short Term Waiver on 7 October 1992, and this did not/does not result in any breach of any term or conditions of the Short Term Waiver …” (§20A(1)), that even if there had been a breach, the Government has waived or acquiesced in the breach (§20A(6)), and that there is no risk of enforcement (§20A(7)).  Those are all hitherto issues that have not been expressly raised;

(d)  The Short Term Waiver was obtained by Ps.  They had had all the information to deal with had they chosen to the issue in their original Reply and Amended Reply.  They did not.  They only propose to do this now in October 2022;

(e)  Ms Leung submits that the proposed amendments, if allowed, would necessitate a further round of discovery and the adducing of expert evidence to canvass the issue as to whether, even if the construction works were conducted after the grant of the Short Term Waiver, Ps would still have needed approval of building plans from the Buildings Department.  From that, Ms Leung submits further that that would result in the trial dates being vacated;

(f)  The lack of diligence in Ps’ prosecution of the action is also relevant.  The action was started in June 2015.  An interlocutory injunction was obtained against D1 on 19 June 2015.  The obligation on Ps’ part to prosecute the case diligently in such circumstances is trite.  The last pleading was filed by Ps in March 2016.  Thereafter, Ps had done nothing to prosecute the action.  In December 2020, D1 applied to have the injunction varied.  The action was only revived thereby.  The substantive hearing took place before Lok J on 30 July 2021.  His Lordship, having allowed the application to vary, noted the state of the action, gave pre-emptory case management orders, and further proceeded to fix the trial date;

(g)  In the course of submissions, Mr Yim referred this court to a number of authorities (Loyal Luck Trading Ltd v Tam Chun Wah [2008] 4 HKLRD 681 and Bakewell Management Ltd v Brandwood (HL(E)) [2004] 2 AC 519 in particular)  and submitted that in the context of prescriptive rights, illegality of use is irrelevant;

(h)  But as I have pointed out above, one of the Declarations which Ps are seeking is that the Government had consented to the dedication;

(i)  One should further note that points of law are not required to be pleaded;

(j)  Relying on those cases, Mr Yim made the submission which he himself accepted to be bold, that even if the amendments are allowed, D1’s request for further discovery and adducing expert evidence are not justified, as their defence based on breach of the Short Term Waiver is bound to fail;

(k)  If that were the case, one asks why Ps find it fit to reply Particulars 22(q)  on top of denying them.  It is grossly unfair for Ps to on the one hand seek to add §20A in further reply, and then to say that D1 should not in any event be permitted to seek to take steps to address them as the defence is bound to fail.  I reject that bold submissions;

(l)  One should also note this.  As Ms Leung has submitted in the course of her oral submissions, it there are matters in the witness statement of Li Kwok Wai which are outwith D1’s pleaded case, it is for Ps to make the appropriate applications in that regard.  I am not encouraging any such application.  Nor am I preempting the results of such applications.  What I am pointing out is that Ps are in effect seeking to add a new paragraph in the form of §20A to reply to facts which they say are not pleaded;

(m)  Towards the end of Mr Yim’s oral reply, Mr Yim submits that Particulars 22(q)  are in fact under §22, which relates to Ds’ defence of radical change of user.  He then submits that in fact, illegality has not specifically been raised.  This submission cuts both way, as the entirety of the proposed §20A is to reply to Particulars 22(q), and is premised upon Particulars 22(q)  having raised the issue of illegality;

(n)  Given the above, and having considered the overarching objectives, I am of the view that D1 would be seriously prejudiced if §20A of the Draft RA-D&C were to be allowed.

16.  For the reasons set out above, I refuse leave to add §20A to the Draft RA-D&C.  Save that particular proposed paragraph, the Amendment Summons is allowed, and the Pleadings Summons as amended thereby is also allowed.

17.  On costs, whilst the applications are made late, I note the background, and in particular the existence of negotiations on settlement which Mr Yim has highlighted.  While they do not justify the delay, they are relevant when it comes whether indemnity costs, which Ms Leung seeks, are justified, and I am of the view that they do not.  I order that Ps shall bear the costs of an occasioned by the 2 Summonses, save the costs of this hearing, which shall be D1’s costs in the cause of the trial, to be taxed if not agreed, with certificate for counsel.