TAN KIM CHUA v. LEONARD K.P. CHIU

1987, No. A1040

IN THE SUPREME COURT OF HONG KONG

HIGH COURT

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D E C I S I O N

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1. This is an appeal by the defendant from a decision of Master Perrior given on the 5th December 1988 when he granted leave to the plaintiff to re-amend the statement of claim. The plaintiff instituted proceedings on the 21st February 1987, claiming the sum of $1,727,864.90 from the defendant by way of his contribution as a co-surety. The claim relates to a guarantee that was executed on the 6th June 1979 by the plaintiff and the defendant whereby they accepted joint and several liability to the Bank of Tokyo for banking facilities to the extent of $3,000,000 granted to Yoong Tatt Kwong who is now deceased.

2. It is alleged in the statement of claim that pursuant to a demand made by the Bank of Tokyo on about the 13th April, 1981 to the plaintiff and the defendant, that the plaintiff paid on the 30th April, 1981, in full settlement of the debt due, under the guarantee the sum of $3,455,729.79. The statement of claim further alleges that the defendant has made no payment under the guarantee by way of contribution. A defence was filed by the defendant on the 27th March 1987 in which it is admitted that the guarantee was entered into by the parties, that Yoong Tatt Kwong is dead, and repayment of the debt to the bank by the plaintiff.

3. Various defences to the claim have been put forward by the defendant but it is unnecessary for me to refer to them for the purposes of this appeal.

4. By the re-amended statement of claim, the paragraph that alleged that the defendant had made no payment under the guarantee has been deleted. In its place, the plaintiff has introduced the following amendments :-

"4.    The Plaintiff and the Defendant had a discussion about the demand referred to in paragraph 3 above. The Defendant represented to the Plaintiff that he did not have sufficient cash to settle his half-share of the sum demanded, i.e., $1,727,364.90. He requested the Plaintiff to pay the entirety of the sum demanded and promised to pay his half-share to the Plaintiff by monthly instalments of $100,000.00 each. The Plaintiff agreed.

5.    Pursuant to the agreement referred to in paragraph 4 above, the Defendant paid the sum of $1.00,000.00 to the Plaintiff on or about 15th April 1981 as being the first of the said monthly instalment.

6.    Pursuant to the agreement referred to in paragraph 4 above, the Plaintiff duly paid the sum of $3,455,729.79 to the Bank of Tokyo Limited on or about 30th April 1981 in satisfaction of its demand referred to in paragraph 3 above (thereby in effect advancing the sum of $1,627,864.90 to the Defendant).

7.    Despite repeated requests and demands made by the Plaintiff orally on numerous occasions between 1981 and 1986, the Defendant has failed or refused to make any further payment to the Plaintiff.

8.    Whenever the Plaintiff requested the Defendant to make payment, the Defendant used delaying tactics such as saying that he did not have money and asking for more time to pay."

5. Subsequent paragraphs allege that the defendant has been in breach of his agreement to pay by instalments and claims the amount originally claimed less the sum of $100,000 paid in 1981, but also in the alternative, under the guarantee.

6. It was conceded by the plaintiff, both before me and before the master, that the amendments introduce a new cause of action which is time-barred and that the only basis for the court's jurisdiction is under O.20, r.5(5) of the Rules of the Supreme Court. Where the limitation period has expired, O.20, r.5(2) provides :-

"(2)    Where an application to the Court for leave to make the amendment mentioned in paragraph (3), (4) or (5) is made after any relevant period of limitation current at the date of issue of the writ has expired, the Court may nevertheless grant such leave in the circumstances mentioned in that paragraph if it thinks it just to do so."

Sub-rules (3) and (4) do not apply to this case, but sub-rule (5) reads :

"(5)    An amendment may be allowed under paragraph (2) notwithstanding that the effect of the amendment will be to add or substitute a new cause of action if the new cause of action arises out of the same facts or substantially the same facts as a cause of action in respect of which relief has already been claimed in the action by the party applying for leave to make the amendment."

By section 35(6) of the Limitation (Amendment) Ordinance 1984, the legislature gave express provision to this rule.

7. It is common ground that the issue that I have to determine does not come within the first limb that the new cause of action arises from the same facts, but under the second limb that it arises out of substantially the same facts. Mr Li, Q.C., counsel for the defendant, submitted that if the new claim is permitted to be introduced, entirely new facts will have to be investigated, viz whether there was a concluded oral agreement between the plaintiff and the defendant, whether it had been partly performed, and whether there were discussions between the parties concerning the performance between 1981 and 1986. These facts do not have to be considered in respect of the original claim wherein reliance is placed solely on the guarantee and payment by the plaintiff to the bank.

8. Guidelines as to the meaning of substantially the same facts were referred to in the case of Brickfield Properties Ltd. v. Newton [1971] 1 W.L.R. 862 which was drawn to my attention by both Mr Li and by Mr Fung, counsel who appeared for the plaintiff. In that case, the Court of Appeal held that the facts of the new and old claim were inextricably entangled so that leave to amend was granted. In his judgment, Cross L.J. at p. 880 said :-

"It is no objection to amendment under Ord. 20, r.5(5), that some of the facts out of which the new cause of action arises are peculiar to it and that some of the facts out of which the old cause of action arises are peculiar to it. It is enough if the overlap is so great that the new cause of action can fairly be said to arise out of substantially the same facts as the old cause of action."

9. Mr Li maintains that the facts are not substantially the same with the result that the court has no jurisdiction to allow the amendments, but that if I hold a contrary view, I should refuse to exercise my discretion. Although the amendments sought relate to a specific oral agreement by the defendant with the plaintiff to pay the amount claimed by instalments, it does not detract from the liability that is contended for by the plaintiff under the guarantee. If, in fact, liability cannot be established under the guarantee, I cannot see how the plaintiff can succeed independently under the oral agreement to pay by way of instalments which is founded upon that guarantee.

10. The amendments constitute a narrative of events from 1981 until 1986 which concerned the manner of payment. Be that as it may, I am quite satisfied that the amendments relate to substantially the same facts upon which the original claim was based. Accordingly, the court has jurisdiction to allow the amendments under O.20, r.5(5) and in the exercise of my discretion, I consider that it is proper to allow those amendments. The appeal must therefore be dismissed with costs.