WELLFIT INVESTMENTS LTD. v. POLY COMMENCE LTD. and Another

Civil Appeal No. 80 of 1995

Headnote

Where material amendments are sought to be made shortly before the hearing, it is incumbent upon the party seeking them to ensure adequate particularity. The constraints of time, and the high risk of the disruption of the orderly conduct of trials by the courts and of prejudice to the other party demand strongly that leave to amend be refused. Following Perak Pioneer Ltd v Carrian Holdings, Civil Appeal No. 59 of 1985 unreported, and Re Unisoft Group Ltd (No. 2) [1994] BCC 766.

IN THE COURT OF APPEAL

1995, No. 80
(Civil)

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J U D G M E N T

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Nazareth, V.-P.:

1. This is an appeal by the 1st defendant ("Poly Commence") against the order of Wong J made on 3rd February 1995 dismissing its application for leave to re-re-amend its defence and counterclaim. Poly Commence was the confirmor in a chain of contracts for the sale of a flat, in which the plaintiff/respondent ("Wellfit") was the ultimate purchaser, and Yorku Development Limited, the 2nd defendant, which has now dropped out of the proceedings, the vendor. Wellfit sued to enforce a sale and purchase agreement made with Poly Commence dated 8th December 1990. The underlying facts were as follows.

2. Wellfit was at the time owned and controlled by a Mr and Mrs Hunt and its sole activity was to purchase the subject property on their behalf. Shortly after the action was commenced, the beneficial interest in Wellfit was sold and transferred to companies owned by the partners of Kao, Lee & Yip, a firm of solicitors who at the time of the sub-sale were Mr and Mrs Hunt's solicitors. Poly Commence first learnt of the sale in mid-1992 as a result of a specific discovery application. Poly Commence was and continues to be owned and controlled by a Mr Edwin Cheung who resides in the subject property with his family.

3. Under the sub-sale agreement completion was to be at 3 pm on 19th December 1990 with completion of the principal agreement at 5.30 pm the same day, time being made of the essence in each case. It is claimed by Poly Commence that because of mistakes made by a clerk employed by Kao, Lee & Yip, one Miss Doris Ting, the completion moneys were not available in time. At 3.24 pm on 19th December 1990, Poly Commence's solicitors, Tai, Ho & Chan, rescinded the agreement and forfeited the deposit on the ground that there had been failure to tender the purchase price. Wellfit alleges and Poly Commence denies, that shortly before the time fixed for completion, in a telephone conversation between Miss Doris Ting and Miss Cecilia Cheng of Tai, Ho & Chan, the time for completion was impliedly extended or relaxed. Poly Commence was nevertheless able to raise the money in time from its own bankers and to complete with the principal vendor.

4. By its Statement of Claim Wellfit sought specific performance. One month before the trial was due to commence on 22nd September 1994, Wellfit applied to amend the Statement of Claim for the third time. The proposed amendment included for the first time a claim for relief against forfeiture. On 7th September 1994 leave was granted to Wellfit. At the same time, leave was also granted to Poly Commence to re-re-amend the defence and counterclaim within 14 days, i.e. by 22nd September 1994. Poly Commence failed to do so in time, and on 29th December 1994 applied for leave to amend. I shall return to the nature of the amendments sought, which has to be addressed. Leave was refused by Wong J on 3rd February 1995. The judge's reasons, which he gave on 24th March 1995, may be summed up in the following way.

5. First, he referred to Poly Commence's considerable delay, stating that "the defendant had ample time to put its pleadings in order but chose not to do so until the eleventh hour. There has been no explanation, satisfactory of otherwise, for this long delay. The order ... was deliberately not complied with".

6. Second, he referred to Wellfit's objection that some of the amendments were not consequential to the amendments made to the Statement of Claim. In that regard he referred to a passage of the judgment of Bramwell LJ in Tildesley v Harper [1976] 10 ChD 393 at pp 396, 397 where he say:

"My practice has been to give leave to amend unless I have been satisfied that the party applying was acting mala fide, or that, by his blunder, he had done some injury to his opponent which could not be compensated for by costs or otherwise."

However, he went on to refer to the following from the top of page 372 of the Supreme Court Practice, Vol. 1, 1995:

"On the other hand, it should be remembered that there is a clear difference between allowing amendments to clarify the issues in dispute and those that provide a distinct defence or claim to be raised for the first time (see per Lord Griffiths in Ketteman v Hansel Properties Ltd [1987] AC 189 at p. 220)."

7. Third, Wong J referred to the lateness of the application to amend. He said:

"This action was commenced more than four years ago and there is just over ten days before the trial. Many of the amendments sought raise new and substantial issues. There is a likelihood that the trial may have to be adjourned if leave to amend at this very late stage is allowed and any delay of the trial will cause injustice to the plaintiff which cannot be compensated for by costs. The conduct of the first defendant is also something that I have to take into consideration.

For those reasons I refuse leave to the first defendant to amend those parts which are objected to by the plaintiff."

8. It is not necessary to set out the text of the amendments for which leave was sought by Poly Commence; they are in any case of some length, and in part fragmented. Suffice it to say that they would enable Poly Commence to rely upon two new points. First, that Miss Cecilia Cheng had no authority to waive the condition as to payment of the balance of the purchase money by 3 pm on 19th December 1990. And second, that having regard to the conduct of Wellfit as already pleaded and the additional facts and circumstances it was sought to plead, it would be inequitable for the relief claimed to be granted. The additional facts and circumstances were contained in nine sub-paragraphs running to some two pages of typescript. Their burden was that Wellfit was controlled by the Hunts who had intended to use the property as their residence; since February 1991 it had been used as the residence of a Mr Edwin Cheung and his family. He had incurred decoration expenses of $450,000 in 1991; the Hunts sold Wellfit to nominees of the partners of Kao, Lee Yip in February 1991 for the amount of approximately $550,000 which was accounted for almost entirely by the lost deposit; the litigation is a speculative suit conducted now on behalf of Kao, Lee & Yip with a view to financial gain.

9. As I have said, Wong J refused leave on 3rd February 1995. The trial with various lengthy breaks took place before Keith J from 15th February 1995 to 4th April 1995. The last day for appealing Wong J's refusal was 22nd March. He did not give his reasons until 24th March. A holding appeal was filed on 23rd March 1995. We are told it was counsel's view that it would not be proper for an appeal to be filed without some substantial ground. Keith J was informed of the possibility of an appeal and reluctantly persuaded to proceed with a view to making findings only of fact that would be subject to the decisions on appeal. That then is the background.

10. It is convenient to address first the two additional grounds of appeal that were the burden of the proposed amendments to the defence, i.e. lack of authority, and unconscionability. Mr Griffiths QC submits that they are highly arguable but that the judge failed to differentiate between them and consider and rule on them separately.

11. Beginning with the first of those grounds, the point made on behalf of Poly Commence is simply that Miss Cecilia Cheng did not have authority to waive the condition in question.

12. Mr Benjamin Yu QC, who with Mr Dennis Law, appears for Wellfit made it clear that what he relied upon was the scope of ostensible authority and not express authority. The evidence points clearly to Miss Cecilia Cheng, who was employed by Poly Commence's solicitors, as the solicitor for Poly Commence as vendor, vis-a-vis Wellfit's, i.e. the purchaser's solicitors, and that Poly Commence's solicitors were employed to deal with the purchase, i.e. carry through the transaction. Upon those facts, in my view, the authorities clearly show that Miss Cecilia Cheng had ostensible authority (see Halsbury's Laws of England 4th Ed. Vol. 44 para. 44; Legione v Hateley (1983) 162 CLR 406; Domb v Isoz [1980] 1 Ch 548 and Crabb v Arun District Council [1976] 1 Ch 179, 193). The point therefore does not seem to me to be arguable and therefore does not avail the appellant.

Unconscionability

13. This is pursued on behalf of the 3rd defendant in two respects. First, the hardship of Mr Edwin Cheung. It is claimed that he will suffer hardship by loss of his residence and that he has been unsuccessful in attempting to secure alternative premises which in any case will cost a lot more because of the substantial rise in property prices. This it is sought to contrast with the position of the partners of Kao, Lee & Yip for whom it is said the matter is simply one of speculative gain. The other respect is the unfair conduct of Kao, Lee & Yip, posited upon the comparatively small outlay relative to the substantial profit, and again a "speculative suit".

14. It was not suggested that the judge wholly overlooked this point. Clearly, he was not impressed by it, and I must say I am not surprised. Kao, Lee & Yip were clearly entitled to take action to limit the damages to which they might have been exposed, by purchasing the plaintiff company. They could not have known that the property market would rise so substantially and must have accepted the risk of it falling. Why the windfall appreciation should accrue to Poly Commence, I cannot understand; it is unthinkable that they would be so eager if the property market had collapsed and a loss had to be met. In addition, Mr Griffiths in support of his submissions sought to rely upon Colon v Murray [1958] NI 17. But the facts there clearly bear no resemblance to those here. Accepting for argument the principle that hardship and unfair conduct may provide a claim for specific performance, I nonetheless have no hesitation in rejecting the ground of unconscionability as arguable on the facts in this case.

15. Reverting to the trial before Keith J, it is clear from the transcript that although counsel for Wellfit below cross-examined Poly Commence's witnesses, all the matters canvassed before us cannot be said to have been fully explored, nor all the evidence for Wellfit led. Nor, it can be seen from the transcript, was Keith J at ease with the trial before him spilling over into the scope of the amendments that had been refused by Wong J. But those are matters I do not find it necessary to go into and I say only that that unsatisfactory situation was precipitated by Poly Commence's late amendment compounded by permitting the trial to proceed while nonetheless pursuing its appeal.

16. Turning then to a general point made by Mr Benjamin Yu in pursuance of the respondent's notice, the proposed amendments particularly the proposed sub-paragraphs (i) to (ix) of paragraph 21 of the defence, can be seen to be lacking in particularity in more than one respect. Particulars of the averment that "the present litigation is in essence a speculative suit conducted on the instigation of the partners of Messrs Kao, Lee & Yip with the view of financial gain despite defaults in completing the sale and purchase of the Properties in accordance with the terms of the second agreement" are not given most significantly in respect of what must be alleged to be professional default. Nor as I have said, is it made clear what a speculative suit is.

17. Where amendments, particularly material amendments of the present sort, are made so shortly before the hearing, it must be incumbent upon the party seeking them to ensure adequate particularity. The constraints of time, and the high risk of disruption of the orderly conduct of trials by the courts and of prejudice to the other party must demand strongly that leave be refused. Thus in Perak Pioneer Ltd v Carrian Holdings Ltd Civil Appeal No. 59 of 1985, Fuad JA (as he then was) commented that:

"As regards particulars, in my view, it is no answer to an objection that a proposed amendment lacks particulars, to say that particulars can later be given. Of course, if a pleading lacks particulars, particulars can be asked for in the usual way and ordered by the Court if necessary, but where an amendment is applied for it would be an unusual case where the Court would consider it appropriate to allow an amendment to be made which lacks particularity, and might cause embarrassment."

Likewise, in re Unisoft Group Ltd (No.2) [1994] BCC 766 at 770-1, Harman J explained in some detail why, in the context of late amendments, requests for further and better particulars are not an answer to the lack of particularity, and cause injustice. In the present circumstances that is a powerful consideration against leave being granted, and unlikely to have escaped the judge.

18. Reverting then to the three reasons given by the judge, Mr Griffiths's criticism of them can be disposed of quite shortly. In relation to the first of the judge's reasons, Mr Griffiths pointed to the notice of the nature of the amendments given by the 1st defendant to Wellfit in September 1994, some three months before the 1st defendant took out its summons for leave to amend. However that cannot in the circumstances excuse the delay. Wellfit's solicitors were pressing Poly Commence to file and serve their amendments or to apply for leave. Yet Poly Commence seemed reluctant to do so. In the circumstances Wellfit could hardly be expected to prepare its defence on the basis of informal notification of the amendments, from which Poly Commence could readily depart. As to the reference to Ketteman v Hansel Properties Ltd, which the judge made in his second reason, while the citation may relate to amendment after counsels' closing speeches, what matters is that the judge was well aware that the practice is ordinarily to grant leave to amend. Third, as to the lateness of the application to amend, upon which I have already touched in the context of the respondent's notice, and to which the ensuing complications at the trial are relevant, I need say only that the judge was perfectly entitled to take it into account.

19. At the end of the day I have to say that I find no error of principle or other good reason why this Court should intervene. Had there been reason to intervene, then the proper exercise of discretion in the circumstances would nevertheless, in my view, produce no different result. I would for all the foregoing reasons dismiss the appeal and make an order nisi that Wellfit is to have its costs of the appeal.

Bokhary, J.A.:

20. I agree that this appeal must be dismissed with costs nisi.

21. As I see it, in the circumstances which existed when the matter was before him, Wong J was acting within the scope of his discretion when he refused leave to amend.

22. The judge had a duty to hold the scales between the parties before him and also to preserve his court's capacity to serve the general body of court users efficiently. He was acting in discharge of that duty when he avoided the adjournment which the amendments sought would have necessitated. Such an adjournment would have resulted in prejudicial delay and an unwarranted loss of judicial time.

23. Is it open to us to take notice of things which occurred thereafter for the purpose of seeing whether they render it appropriate for us to grant such leave now even though the same had been justifiably refused by the judge when the matter was before him? Assuming without deciding that such a course is legitimate, I nevertheless see nothing in what occurred after the judge had refused leave which renders it appropriate to grant leave now.

24. Nor, I might add, do I think that subsequent developments cast any doubt on the wisdom of the judge's decision to refuse leave to amend.

Liu, J.A.:

25. I agree the appeal should be dismissed.