CABLE & WIRELESS HKT INTERNATIONAL LTD. v. NEW WORLD TELEPHONE LTD.

HCCL 229/1999

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

COMMERCIAL ACTION NO.229 OF 1999

(formerly High Court Action No.2076 of 1999)

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J U D G M E N T

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1. There are before the court today two summonses. First, the plaintiff's summons dated 18 April, which on its face deals with two matters :

(a) the issue of payment of costs of the Order 14A argument; and

(b) directions for the further conduct of this action.

The second summons is another summons dated 16 May issued by the plaintiff, wherein the plaintiff seeks leave to amend its Statement of Claim in the terms set forth in the draft annexed to that summons.

2. With regard to the first summons, I dealt with paragraph 1 thereof - the issue of the variation of the costs order nisi as contained in the judgment of this court dated 5 April dismissing the defendant's application under Order 14A, rule 1 - when these summonses were first called on on 19 May 2000. The balance of that summons dealing with directions, together with the amendment summons in its totality, were then stood over until today, primarily in order to give the defendant the opportunity to reflect on the proposed amendments to the Statement of Claim.

THE SUMMONS TO AMEND

3. Mr Shieh, on behalf of the plaintiff, formally moves the amendment in terms. Not all the amendments are opposed. Mr Carolan, who appears today for the defendant as he did at the first hearing of this summons on 19 May, has helpfully indicated that the extent of the defendant's opposition falls into three distinct categories :-

(i) paragraphs 11B and 30C;

(ii) paragraph 17B, and the first sentence of paragraph 22D; and

(iii) paragraphs 29B and 29C.

No other objections are raised.

4. The areas covered by these paragraphs are broadly thus :

5. Paragraph 11B (to which paragraph 30C(1) follows) pleads an implied term within the agreement between the parties that, as a matter of law, in dealing with each other in respect of the implementation of the agreement, the plaintiff and the defendant would act in good faith.

6. Paragraph 17B (to which the alternative plea within the opening sentence of paragraph 22D follows) pleads that if, on a true construction of the 1995 Determination, the local network operator did not have to terminate an incoming external call to earn a delivery fee, it would not on any account be entitled to the fee if it participated in any refiling contrary to the other statements of the Telecommunication Authority.

7. Paragraphs 29B and 29C - those which Mr Carolan characterizes as the 'new mistake' paragraphs - plead payment made by the plaintiff under a mistake of fact, namely, that the defendant had not participated in refiling of such calls, and this plea is relied on even if, which is denied, under the 1995 Determination a local operator does not disentitle itself to delivery fees for incoming international calls where it has participated in refiling, contrary to the policy of the Telecommunication Authority as declared in Statement No.1. The plaintiff here contends that had it known what was going on it would not have paid the delivery fees in the first place, and would have reported the matter to the Telecommunication Authority and obtained a new proscriptive Determination on the point as a matter of urgency.

8. The foregoing summary is intended to be no more than a broad indication of the relevant amendment battleground. The amendments speak for themselves on the face of the proposed amended pleading, and the context of these particular matters can, I hope, be gleaned from the substantive judgment of this court upon the Order 14A application.

9. Mr Carolan's primary submission upon these three categories of proposed amendments is that they are incontestably bad as a matter of law, and thus are demurrable on their face. He runs a secondary argument, which represents a pronounced theme in the defendant's skeleton argument (which he did not draft) wherein it is said (at paragraph 4) that the "startling" new allegations now pleaded have as their true function and common characteristic "a propensity for complicating NWT's appeal against the recent dismissal of its application under RHC, Order 14A". Whilst Mr Carolan did not choose to put it precisely in this way, the burden of his secondary argument, I think it fair to say, is that if the court was in any doubt about the elements of the proposed amendments to which his client has specifically now voiced its objection, the matter of the amendments could be stood over until the hearing of the interlocutory appeal, which he informs me is anticipated to be fixed in or about October of this year. Accordingly, he says, the Court of Appeal can then attach itself to the proposed amendments at the same time as hearing the substantive appeal against the refusal of Order 14A relief; alternatively, if the amendments were to be granted in the face of his current opposition, a further Notice of Appeal against the allowance of such amendments would in due course be filed, so that the Court of Appeal then would have two interlocutory appeals before it and not, as at present, one.

10. I am not attracted to the suggested course of leaving the issue of these amendments to the Court of Appeal, persuasively though it was broached. It seems to me that I should grasp this particular nettle, and that the existence of the forthcoming appeal should not detract from this exercise. In so far as it be relevant, however, I do not accept the proposition that the "true function" of these allegations is to complicate NWT's forthcoming appeal. As Mr Shieh has confirmed to the court today, and indeed as is reflected by my memory and by my notes of the ambit of the Order 14A argument, the substance and nature of the amendments to which objection is now taken was clearly flagged and outlined by leading counsel for the plaintiff, Mr Field, during argument on the Order 14A application, and further represent matters which, as the judgment makes clear (see in particular pages 15O-17Q thereof), specifically were considered and taken into account by the court in deciding whether to accede to the Order 14A application.

11. So I will decide the amendment issue now. The proposed amendments clearly all represent arguments emerging from the same factual matrix with which the court will have to grapple at trial, so that no new and unanticipated factual underpinning emerges. I bear in mind, moreover, that except in the most demonstrably clear instances, it is inappropriate summarily to decide legal points on a strike out application (or, as in this context, in terms of resistance to proposed amendments). As Sir Nicholas Browne-Wilkinson, VC observed in Frogmore Estates plc v. Berger & Others (1989), unreported, Transcript No.Ch.1988 F 9850, at page 24 :

"... it is better in an emerging body of law to allow the decision to be made on actual facts, not hypothetical or vague principles ..."

quoting in this regard Lonrho plc v. Fayed, [1989] 3 WLR 631. Whilst in Lonrho plc v. Tebbit, [1991] 4 All ER 973, at 979, the Vice-Chancellor further observed :-

"STRIKING OUT

A claim should only be struck out in a plain and obvious case. The difficulty arises where, as in the present case, a claim to strike out depends upon the decision of one or more difficult points of law. In such a case, the judge should normally refuse to entertain such a claim to strike out. But, if in a particular case the judge is satisfied that the decision of the point of law at that stage will either avoid the necessity for trial altogether or render the trial substantially easier and cheaper, he can properly determine such difficult point of law on the striking-out application : see Williams & Humbert Ltd v W & H Trademarks (Jersey) Ltd [1986] 1 All ER 129 at 139, 143, [1986] AC 368 at 435-436, 441 per Lord Templeman and Lord Mackay.

In considering whether or not to decide the difficult question of law, the judge can and should take into account whether the point of law is of such a kind that it can properly be determined on the bare facts pleaded or whether it would not be better determined at the trial in the light of the actual facts of the case. The methodology of English law is to decide cases not by a process of a priori reasoning from general principle but by deciding each case on a case-by-case basis from which, in due course, principles may emerge. Therefore, in a new and developing field of law it is often inappropriate to determine points of law on the assumed, and scanty, facts pleaded in the statement of claim. Thus in Union Carbide Corp v Naturin Ltd [1987] FSR 538 at 544 Slade LJ said :

'There is at least one good reason why in particular, in my judgment, the court hearing a striking out application should be slow to commit itself to stating principles of law which are not clearly covered by previous authority.

Ex Hypothesi it has to deal with the application on assumed facts. General statements of legal principle made on assumed facts are, in my experience, a perilous exercise, since they may well require addition or qualification when applied to the facts as actually found on the evidence in a particular case.'" (emphasis added)

I note in passing that this latter quotation could as easily apply, in my view, to the Order 14A application - but that, perhaps, is to trespass upon matters already decided and presently the subject of appeal.

12. In his skeleton argument, Mr Shieh has further referred me to a number of authorities serving to demonstrate that an implied duty of good faith, as a developing concept in the common law world, cannot on its face be castigated as "hopeless or unarguable", which for present purposes is the benchmark the defendant needs to attain. Whilst as to the issue concerning the Telecommunication Authority's statements, it was not, he said, a question of them "overriding" the TA's Determination, and the court was entitled to take into account the TA's express proscriptions in construing the TA's Determination. Moreover, continued Mr Shieh, the question of how and when the plaintiff could have procured a revision of the 1995 Determination is and was clearly a matter of evidence. The defendant knew full well the turn which events had taken after the plaintiff had discovered the existence of the diversion calls. It therefore sounded ill in the mouth of the defendant to complain that they did not know how events might have developed if the matter had been raised earlier. If, said Mr Shieh, it is the defendant's case that things indeed would have happened differently, it is open to them so to plead.

13. Looked at overall, submitted Mr Shieh, the proposed pleading was manifestly not demurrable on its face, nor could it fairly be said to complicate or prejudice the proposed appeal for the reasons, inter alia, further outlined in detail in paragraph 8 of his useful skeleton argument.

14. I agree. After considering these specific amendments, together with the submissions of counsel, and having reminded myself of the content of the substantive judgment of 5 April 2000, I have no hesitation in granting the plaintiff leave to amend in terms. The matters pleaded may or may not succeed at trial, I know not, nor do I wish to speculate. But in my judgment they are not incontestably bad, and in accordance with accepted principle are to be permitted to go forward for full debate at the appropriate time and place. Listening to this application, it was difficult not to be reminded of the words of Saville LJ in British Airways Pension Trustees Ltd v Sir Robert McAlpine & Sons Ltd (1994), 45 Con LR 1 at 5, cited with approval by Morritt LJ in Morris & Others v. Bank of America National Trusts & Others, [2000] 1 All ER 954 at 970 :-

" Pleadings are not a game to be played at the expense of the litigants, nor an end in themselves, but a means to the end, and that end is to give each party a fair hearing. Each case must of course be looked at in the light of its own subject matter and circumstances."

I respectfully agree with and adopt those sentiments. In my judgment, in light of the circumstances and subject matter of this case, a fair hearing ineluctably involves permitting these amendments as drawn.

15. Accordingly, on the plaintiff's summons dated 16 May 2000, I make an order in terms.

THE BALANCE OF THE PLAINTIFF'S SUMMONS DATED 18 APRIL 2000

16. I turn now to the consequent procedural directions canvassed by this summons. As I made clear at the original hearing, I do not think it appropriate presently to make procedural orders subsequent to discovery - which means that I now adjourn sine die with liberty to restore paragraphs 5-9 of this summons.

17. Now that I have ruled upon the plaintiff's application for leave to amend (wherein formal service of the Amended Statement of Claim is dispensed with), it seems to me, subject to any refinements which counsel may shortly suggest, that the following consequential orders also are appropriate :-

(1) the defendant to have leave consequently to amend its Defence and Counterclaim, if so advised, within 14 days from the date hereof;

(2) the plaintiff to have leave consequently to amend its Reply and Defence to Counterclaim, if so advised, within 14 days thereafter;

(3) the plaintiff do within 21 days after close of pleadings, as so amended, file and serve on the defendant its List of Documents;

(4) the defendant do within 14 days thereafter (but in any event, no less than 35 days from close of pleadings, as so amended) file and serve on the plaintiff its List of Documents;

(5) the documents so discovered be available for inspection after the expiry of seven days of service of the respective Lists; and

(6) the costs of this directions application be in the cause.

18. I will hear any observations upon these directions that counsel may now wish to make, in particular in terms of the time element.

[Submissions from counsel]

19. Counsel have submitted on two points. Let me deal with them in order.

20. First, as to the procedural directions, Mr Carolan and Mr Shieh are united in their view that the original formulation as suggested by the court in terms of paragraphs 4 and 5 is not appropriate. They suggest, and I agree, that paragraph 4 of the proposed direction should read : "the parties do file and serve Lists of Documents within 35 days of the close of pleadings as so amended", and in terms of paragraph 5 "that there be mutual inspection of documents seven days after service of Lists". Accordingly, I make such directions as so varied.

21. Next comes the question of costs. I am now reminded by counsel that at the hearing of this matter on 19 May, I reserved the costs of that day to the forthcoming hearing which is, of course, that of today. I confess I had overlooked this. I must, therefore, deal with the costs of both summonses.

22. As to the costs of the plaintiff's summons dated 18 April, Mr Carolan suggests, and I think that he is right, that there should be a bifurcated costs order, and that the costs of the argument as the variation of the costs order nisi must be to the plaintiff in any event, to be taxed if not agreed, and that the costs with regard to the balance of that summons should be costs in cause. I so order, and leave the taxing master to entertain submissions from the respective solicitors as to the way such costs can be apportioned.

23. This then leaves the costs of the plaintiff's amendment summons dated 16 May. Earlier in this judgment, subject to the submissions of counsel, I have simply made an Order in terms of that summons as drawn, and as Mr Carolan has pointed out, the plaintiff itself, at paragraph 3 of this summons, accepted that the costs of and occasioned by this application and of the amendments consequential thereon be to the defendant in any event. Mr Carolan says that there is, in the particular circumstances of this case, no reason to change that which the plaintiff has provided on the face of its own summons unless the court can say that the opposition to the amendments (which he notes was selective) should never have been made at all. Mr Shieh, for his part, says that had the matter ended on 19 May, that is, the first hearing of this summons, he could not have resisted the costs order as reflected on the face of the summons, but that nevertheless there has been an argument this morning, he has won, and he should be compensated in costs. That broadly is the shape of the debate.

24. It is now late and I have no wish to prolong this matter further. At the end of the day, bearing in mind all the circumstances of the case, and given that the amendments were proffered rather later than the plaintiff clearly had intended, thus causing the matter to be stood over to a second day, I am not, on reflection, minded to interfere with the Order, which is reflected in paragraph 3 of the plaintiff's summons. This is a close run thing but I will not indulge, as Mr Carolan puts it, in "microsurgery" in terms of costs. Indeed, as he says, both parties would have had to come here today in any event, argument as to the proposed amendments notwithstanding. Possibly this is not the most satisfactory outcome, but looked at overall I think it is not unfair, and I will leave matters as they are.

25. I thank both counsel for their assistance.