SONG CONGYING v. CHENG WAI KIN t/a SHING SHUN FOREIGN CURRENCY EXCHANGE CO

HCA 1625/2019

[2020] HKCFI 2751

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

ACTION NO 1625 OF 2019

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DECISION

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THE APPLICATION

1.  This is an application made by the Plaintiff by summons dated 10 March 2020 for leave to amend her Statement of Claim.  

2.  In summary, the Plaintiff seeks to introduce a new case of fraud against the Defendant, together with a separate fresh cause of action to set aside the judgment of Wilson Chan J in HCSD 11/2018 dated 19 March 2019 (“HCSD Judgment”) by reason of it allegedly having been obtained by fraud.

BACKGROUND

3.  The underlying proceedings relate to a RMB currency exchange transaction which took place on 12 October 2017. 

4.  The Plaintiff is a businesswoman, and was a director and sole shareholder of Tat Shing Development Limited (“Tat Shing”).  Tat Shing was a company incorporated in Hong Kong carrying on business in currency exchange.  It was de-registered as a company on 29 December 2017.

5.  The Defendant is a sole proprietor of a currency exchange business trading as Shing Shun Foreign Currency Exchange Co.

6.  The Plaintiff’s case is that she entered into a loan agreement, in her personal capacity, with Best Year Enterprises Limited (“Best Year”) on 11 October 2017 under which she agreed to lend HK$4 million to Best Year for one year with interest at 10% per annum.

7.  According to the Plaintiff, since she did not have sufficient local currency to advance the loan proceeds to Best Year, she wished to exchange RMB into HKD in order to raise the required funds.  The agreed exchange rate was 0.8575.  It was agreed that the Defendant would transfer HK$4 million to Best Year.  In exchange, the Plaintiff would pay RMB 3.43 million to certain accounts specified by the Defendant.

8.  On 12 October 2017, the Defendant forwarded the Plaintiff an image of a deposit slip by WhatsApp which purported to show that HK$4 million had already been transferred to Best Year’s account (“Deposit Slip”). After receiving the Deposit Slip, the Plaintiff deposited a total of RMB 3,457,440 into three different accounts nominated by the Defendant.  This included a smaller sum of RMB 27,440 which was unrelated to the subject currency exchange.

9.  On 13 October 2017, it was discovered that the HK$4 million had not been transferred to Best Year.  In these proceedings, the Plaintiff seeks recovery of RMB 3.43 million by reason of the Defendant failing to transfer of HK$ 4 million to Best Year, as agreed.

10.  There is no dispute between the parties that the Deposit Slip is not a genuine document, and that its contents were altered to falsely show that the HK$4 million was paid by bank transfer.  In fact, no bank transfer took place.  In reality, the money was purportedly paid by way of a cheque which was later dishonoured.  As a result, Best Year never received the HK$4 million.

11.  On 19 March 2018, the Plaintiff served a statutory demand on the Defendant for RMB 3.43 million (“Statutory Demand”). The basis of the Statutory Demand was that the Plaintiff was entitled to recover the sum because Best Year had not received the HK$4 million.   The Defendant applied on 13 April 2018 to set aside the Statutory Demand in HCSD 11/2018.  The substantive hearing took place before Wilson Chan J on 19 December 2018.

12.  The application to set aside the Statutory Demand was made on the basis that the debt disputed because: (i) both parties were a victim of a fraud because the currency exchange transaction was referred to Kwok Hing Reminbi Exchange Shop (“Kwok Hing”), and it was Kwok Hing who provided the forged Deposit Slip to the Defendant which was then forwarded by the Defendant to the Plaintiff; (ii) the Plaintiff was not a contracting party to the currency exchange transaction because it was made by her company, Tat Shing; and (iii) the Defendant did not enter into the transaction personally but merely as agent of Kwok Hing.

13.  In the HCSD proceedings, there was no suggestion that the Defendant knew that the Deposit Slip was not a genuine document.    There was no allegation that the Defendant was involved or complicit in the forgery.  The HCSD Proceedings proceeded on the basis that the image of the Deposit Slip was provided by Kwok Hing to the Defendant, who then forwarded it to the Plaintiff.

14.  The HCSD Judgment was given on 19 March 2019.  The Statutory Demand was set aside on the basis that there was a bona fide dispute of the debt on substantial grounds.  It was held that there was a genuine dispute as to whether the Plaintiff, as opposed to Tat Shing, had standing to claim in her personal capacity, and also whether the Defendant only entered into the currency exchange transaction as agent for Kwok Hing.  Costs were awarded against the Plaintiff (“HCSD Costs Order”).  There was no appeal against the HCSD Judgment.

15.  On 26 March 2019, these proceedings were commenced.  At the CMC, the Plaintiff confirmed that there was no intention to amend her pleadings.  At present, the pleadings and discovery have been completed, and the parties have exchanged witness statements.  The latest of the witness statements is dated 31 October 2019.

16.  The Defendant has not produced any documents or records to show that the image of the Deposit Slip was provided to him by Kwok Hing, or for that matter, any other third party.  However, the Plaintiff has not made any application for specific discovery.

17.  On 10 March 2020, the present application was taken out.   The Plaintiff did not file an affirmation in support of the application.

18.  By an order of a Master dated 21 April 2020, the Defendant was required to briefly state the grounds of objection to the application.  On 28 April 2020, the Defendant’s solicitors stated that the principal grounds of objection were that the pleadings of fraud in the proposed amendment were not supported by the required particulars, and the Plaintiff was not entitled to overturn the HCSD Judgment.

19.  On 11 May 2020, an allocatur in the HCSD proceedings was issued certifying that the taxed costs were HK$650,686.70.  No payment has been made by the Plaintiff despite demands for payment.  A statutory demand dated 6 July 2020 has been issued by the Defendant for the sum and accrued interest.

20.  At the hearing, I inquired whether the Plaintiff intended to satisfy the costs order since past evidence of failing to satisfy a costs order might arguably be relevant to the issue of prejudice suffered by the Defendant.  In particular, I asked Mr Lam whether his client was prepared to give an undertaking to the Court to pay the costs order.  Since Mr Lam needed time to take instructions on this issue, and could not immediately contact his client, I requested his solicitors to indicate in writing after the hearing whether an undertaking would be provided.

21.  On 24 August 2020, the Plaintiff’s solicitors stated that the Plaintiff was unable to give the undertaking, and indicated an intention to apply for a stay of the allocatur on the basis of an alleged set-off.  There was also correspondence from the Defendant’s solicitors.  On 28 August 2020, the Plaintiff’s solicitors informed the court that the stay application was issued.  I propose to simply proceed on the basis that the Plaintiff has offered no undertaking to pay the costs order, and it remains unsatisfied.  I do not express any view on the merits of the late stay application which, in reality, was only prompted by the court’s inquiry raised with Mr Lam at the hearing. 

THE PROPOSED AMENDMENTS FOR THE NEW CASE OF FRAUD

22.  The original claim was a straightforward one for the recovery of RMB 3.43 million.  There was no suggestion that the Defendant knew of, or was involved in, the forgery of the Deposit Slip.

23.  The proposed amendments are set out in a draft Amended Statement of Claim (“Draft ASOC”) to the Plaintiff’s summons.  I was informed by Mr Lam at the hearing that the draft amendments were not settled by counsel.  This was, in my view, surprising given the serious nature of the new allegations advanced in the Draft ASOC.

24.  Draft ASOC §13A.1 pleads that:

“The Deposit Slip was forged and such forgery was known and/or should have been known to the Defendant at all material times; and/or the Defendant was reckless as to whether the Deposit Slip was forged or otherwise”.

25.  Draft ASOC §13A.2 pleads that:

“ … the Defendant knew and/or was reckless at all material times as to whether the Deposit Slip was forged or otherwise and/or caused the forgery of the Deposit Slip in the following manner … ”

26.  Draft ASOC §13A.2(1)-(2) set out the particulars of why the Deposit Slip was not genuine in that it was “doctored” to show a payment was by of bank transfer rather than by cheque.  However, there are no particulars relating to the state of knowledge of the Defendant of the forgery. There are also no particulars setting out on what basis it is alleged that the Defendant “caused” the forgery of the Deposit Slip as pleaded in Draft ASOC §13A.2.

27.  Draft ASOC §13A.3 pleads that:

“Despite the knowledge of the Deposit Slip as being forged as pleaded hereinabove, the Defendant dishonestly made use of the forged document, ie the Deposit Slip in order to induce the various payments in RMB by the Plaintiff to the different bank accounts as designated by the Defendant as particularized below”.

28.  Draft ASOC §§21-23 pleads a case of misrepresentation against the Defendant based on the sending of the Deposit Slip. 

29.  In this context, Draft ASOC §22 pleads that:

“The Representation was made by the Defendant fraudulently and/or negligently in that the Deposit Slip was forged to the knowledge of the Defendant and/or such forgery was caused by the Defendant by reason of the facts as pleaded in paragraphs 12, 13, 13A hereinabove”.

30.  Draft ASOC §§24-26 sets out the Plaintiff’s case in relation to its new cause of action to set aside the HCSD Judgment by reason of it allegedly being obtained by fraud. 

RELEVANT LEGAL PRINCIPLES

31.  Amendments should in general be allowed if they are necessary to enable real questions and controversy between the parties to be decided, provided that they will not prejudice the other party and if any prejudice can be compensated by an order as to costs.  After the CJR, the underlying objectives in RHC Order 1A are also taken into account by the court, and all relevant factors are balanced to decide how its discretion should be exercised, if the application is made in circumstances offending the underlying objectives: Bruce James Stinson v Gu Ming Gao [2018] HKCA 10 at §35 per Kwan JA.  Accordingly, it cannot be assumed that once the principles in Ketteman v Hansel Properties Ltd.  [1987] AC 189, 212F-H are satisfied that an amendment will be allowed: Topwell Corp Ltd v Kwan Kam Kee [2014] 5 HKLRD 1 at §39 per Kwan JA. 

32.  RHC Order 20, rule 8(1A) provides that the Court shall not order a pleading to be amended unless it is of the opinion that the order is necessary for disposing fairly of the cause or matter or for saving costs.  Mr Kam relies on White Book 2020 §20/8/28 for the proposition that the court will only permit a new case to be introduced by way of an amendment under exceptional circumstances. 

33.  I do not consider the introduction of a test of “exceptional circumstances” to be helpful in answering the question of whether an amendment introducing a new case should be allowed.  As pointed out by To J in Chong Hing Bank Ltd v Lau and Cheng Investment Ltd (HCMP 1574/2009, 19 September 2013) at §22, RHC Order 20, rule 8(1A) does not impose a requirement of “exceptional circumstances”.  

34.  I respectfully agree.  In my view, this approach would simply beg the question of whether the justification put forward in any given case amounts to “exceptional circumstances”.  Generally speaking, however, I agree that introducing an entirely new case by way of an amendment is more likely to offend the underlying objectives of the CJR than a mere refinement of an existing case because it is more likely to cause “prejudice, delay and wastage of costs”: Igal Dafni v CMA CGM SA [2013] 2 HKLRD 73 at §20 per Recorder Horace Wong SC.  Accordingly, the reasons advanced in support of the new case will need to be carefully examined.  Much will depend on the specific facts and the particular context in which the application for amendment is made. 

35.  Mr Kam further relies on Marquis Trading Co v Associated Bankers Insurance Co Ltd [1982] HKLR 434, 438G-H per Barker JA for the proposition that an amendment to allege fraud will not normally be allowed where it is raised for the first time by way of amendment.  In Marquis Trading, Barker JA relied on the judgment of Lord Esher MR in Bentley v Black (1893) 9 TLR 580 to the effect that there was a rule of universal practice that, except in the most exceptional circumstances, an amendment for the purpose of adding a plea of fraud would not be allowed where fraud was not pleaded at first instance.  It appears, however, that there is actually no such general rule of practice in place: White Book 2020 §20/8/23. 

36.  In Atkinson v Fitzwalter [1987] 1 WLR 201, Stocker LJ was unable to conclude that there was any general rule that allegations of fraud must be pleaded at the outset and cannot be added by amendment.  May LJ did not see any logical reason why the fact that an allegation of fraud was involved would take the case outside the general principle that all amendments should be allowed to ensure the real matters in controversy are before the court provided there is no prejudice to the other side.  But the more serious the allegation that is made, then the more clearly satisfied must a court be that indeed no prejudice caused.

37.  Atkinson has been approved locally: Shiamas Ltd v Concord Way Ltd [2019] HKCFI 1418 at §§29-32 per DHCJ Le Pichon and Heraeus Ltd v Chan Yun Mui [2018] HKCFI 2721 at §54 per DHCJ Marlene Ng.  Accordingly, I will proceed on the basis that there is no presumptive prohibition or rule of practice against the introduction of a new case of fraud by way of an amendment.

38.  In relation to pleading fraud, it is a cardinal principle that an allegation of fraud must be pleaded distinctly and with utmost particularity: ADS v Wheelock Marden & Co Ltd [1994] 2 HKC 264, 270 per Bokhary JA.  Further, an allegation of fraud or dishonesty must be sufficiently particularised, and particulars of facts which are consistent with honesty are not sufficient: Three Rivers DC v Bank of England (No 3) [2003] 2 AC 1 at §186 per Lord Millett. 

39.  An allegation that a party “knew or ought to have known” is not a clear and unequivocal allegation of actual knowledge and will not support a finding of fraud.  It is not treated as making two alternative allegations, but rather a single allegation that he ought to have known: Armitage v Nurse [1998] Ch 241, 257B-C per Millett LJ; Paragon Finance plc v DB Thakerar & Co [1999] 1 All ER 400, 407d-e per Millett LJ.

40.  Therefore, where a claim involving an allegation of dishonesty or fraud requires a plea of actual knowledge, and yet the pleader only makes a “rolled-up” plea, the claim is liable to be struck out for disclosing no reasonable cause of action or being embarrassing: Top Point Ltd v K & L Gates (a firm) [2020] 1 HKLRD 814 at §19 per Lok J.

THE NEW CASE OF FRAUD

41.  Mr Lam argued in support of the new amendments on fraud by stressing that allowing them would enable the court to determine the real controversies in dispute between the parties. 

42.  Mr Lam explained at the hearing that the new case of fraud was prompted by the fact that the Defendant had failed to disclose any documents showing that the image of the Deposit Slip was provided to him by a third party.  Mr Kam, for the Defendant, accepted that there was non-disclosure in this regard.  Even though the Defendant mentioned the Deposit Slip in his witness statement, he did not refer to any records showing how it was forwarded to him from Kwok Hing as alleged.  According to Mr Lam, this was a matter of concern because it undermined the Defendant’s explanation of being an innocent party.

43.  Mr Lam argued that the amendments are sufficiently clear and they leave no room for doubt as to the nature of the case which the Defendant would have to meet at trial.  The late timing of the application was explicable by the fact that it was not until discovery was completed and the witness statements were exchanged that it became clear that the Defendant would not produce the records showing any communication from Kwok Hing in relation to the image of the Deposit Slip.

44.  In opposing the amendment, Mr Kam emphasised the strict rules on the pleading of fraud, and that there were no particulars in relation to the alleged knowledge of the Defendant about the forgery.    Mr Kam also submitted that it require exceptional circumstances for the court to permit a new case of fraud by way of amendment.  It was argued that the fraud claim was bound to fail as being contrary to the evidence.  Further, allowing the claim at such an advanced stage of the proceedings would lead to prejudice which could not be compensated in costs, particularly where the Plaintiff has failed to pay the HCSD Costs Order.

45.  In considering the rival contentions, the starting point is to examine the substance of the amendments.  The proposed amendments (not drafted by Mr Lam) are, in my view, far from satisfactory in this regard.  Draft ASOC §13A.1-2 (set out at §§24-25 above) is drafted in a confusing and rolled-up manner.  On a proper examination, it seeks to make four different averments, namely, that the Defendant (i) should have known of the forgery; (ii) knew of the forgery; (iii) was reckless as to whether the Deposit Slip was forged; and/or (iv) caused the forgery.

46.  Each of these averments carries a different meaning.  A case of mere negligence in failing to notice or detect that the Deposit Slip had been altered previously is a completely different case from claiming that the Defendant was in fact the party responsible for “causing” the forgery.  Further, actual knowledge of the forgery is different from mere negligence, and for that matter, causing the forgery itself.  Therefore, in my view, the nature of the allegation raised in the proposed amendment is problematic because the precise basis on which it is alleged that the Defendant was ‘associated’ with the forgery is unclear.

47.  Moreover, in my judgment, there is a serious problem arising from the “rolled-up” plea of knowledge.  It is alleged that the forgery “should have been known” to the Defendant, at the same time when more serious pleas of recklessness, actual knowledge and causing the forgery are advanced at the same time.  Applying the principles in Armitage v Nurse, in my view, this is not a clear and distinct allegation of actual knowledge.  I do not accept Mr Lam’s submission that the Plaintiff’s case of fraud is clear from the amendments.  I conclude that the averments in Draft ASOC §13A.1-2 are equivocal, inconsistent and do not provide the Defendant sufficient notice of the actual case it has to meet.  They do not comply with the strict requirements of pleading fraud distinctly and with utmost particularity.  A party alleged of being guilty of fraud should not be left guessing as to what exactly is the case advanced against him.

48.  I do not accept that the proposed amendments are “saved” (in the sense that the Plaintiff’s case is made clear) by the allegation that the “Defendant dishonestly made use of the forged document” in Draft ASOC §13A.3.  This would involve adopting a blinkered approach to the pleadings, and ignores what is expressly pleaded in Draft ASOC §13A.1-2 which does not contain a singular allegation of dishonesty or fraud.  This also ignores the fact that Draft ASOC §22 sets out the Plaintiff’s case of misrepresentation as being made “fraudulently and/or negligently”.  That plea is self-evidently not an unequivocal allegation of fraud.  Viewing the draft amendments as a whole, I do not agree that the amendments make it clear to the Defendant the case it would have to meet at trial.  In my view, the amendments do not satisfy the stringent requirements for pleading a case of fraud.

49.  Moreover, Draft ASOC §13A.2(1)-(2) is also illogical and problematic.  The matters pleaded are said to be matters in support of the Defendant’s knowledge or his causing the forgery “in the following manner”.  One would naturally expect particulars of knowledge, or on what basis it is alleged that the Defendant “caused” the forgery.  But Draft ASOC §13A.2(1)-(2) does nothing of the short.  It only provides particulars of why the Deposit Slip was not genuine, which is a matter not in dispute between the parties.

50.  Further, in the exercise of my discretion, I also take into account the fact that the proceedings are already at an advanced stage.  As I have alluded to earlier, discovery has been completed and witness statements have already been exchanged.  At this stage, it appears that the parties are ready for trial.  Subject to the outcome of this application, I have not been informed that there is any other outstanding matter which would prevent the parties from proceeding to trial.  

51.  If the application for leave to amend was allowed, there would be further delay to these proceedings arising from the need for amendments to pleadings, possible further discovery and the need for further witness statements to be exchanged.  To mitigate the impact of the delay, Mr Lam submits that a strict timetable may be imposed by the Court with a view to bringing the matter to trial expeditiously. 

52.  However, in view of the gravity of the new allegations that the Defendant would have to meet if the amendments were permitted, I have reservations that this approach would be fair to the Defendant.  I consider that the Defendant ought, as a matter of basic fairness, be given ample opportunity to effectively answer the new case against him.  This is especially the case since the present application was only taken out by the Plaintiff on 10 March 2020.  In my view, the lateness of this application, coupled with the inevitable delayed resolution of these proceedings, is an important factor against allowing the amendments.

53.  Moreover, there is a lack of a satisfactory explanation for the delay and the reasons for taking out the amendment application by way of an affirmation filed by the Plaintiff.  As mentioned above, the Plaintiff filed no affirmation in support of this application.  In an application such as the present, where an allegation of fraud is sought to be introduced at an advanced stage of the proceedings, I would have expected that it would be incumbent on the Plaintiff to set out the justifications for the application by way of admissible evidence.  The absence of such evidence is, in my view, a further factor against allowing the application.

54.  I have not lost sight of the lack of satisfactory disclosure from the Defendant in relation to the Deposit Slip.  Non-disclosure does not necessarily suggest that the Defendant was implicated in the fraud.  But more importantly for present purposes, this does not exempt the Plaintiff from properly pleading a case of fraud.  In addition, it is surprising that the Plaintiff has not decided to issue an application for specific discovery to seek disclosure of documents and there is no evidence to explain why no application was taken out.  

55.  In the exercise of my discretion, I have found it unnecessary to take into account Mr Kam’s submission that there is a real risk that there would be prejudice to the Defendant which cannot be compensated by way of costs in the light of the Plaintiff’s failure to satisfy the HCSD Costs Order.  His argument was that in view of the Plaintiff’s previous demonstrated refusal to comply with court orders in relation to the payment of costs, that one can infer that even if a costs order were made on this application, there would be a real risk that it would remain unsatisfied.  Thus, according to Mr Kam, the Plaintiff’s contention that there is no prejudice which cannot be compensated by way of costs is one which needs to be viewed with caution.  There is force in this argument, but in my view, there is already real prejudice occasioned because the nature of the case of fraud sought to be introduced by way of the amendments is unclear and deficient, and the delay to the prompt resolution of the proceedings which would result from allowing the application. Had I taken Mr Kam’s submission into account, this might well have been a further factor against allowing the application.

56.  For these reasons, and in the exercise of my discretion, I refuse to allow the proposed amendments in the Draft ASOC seeking to introduce the new case of fraud.

THE SETTING ASIDE OF THE HCSD JUDGMENT

57.  The applicable legal requirements of a cause of action to set aside a judgment by reason of it having been obtained by fraud were addressed by the Court of Appeal in Mayer Corporation Development International Ltd v Alliance Financial Intelligence Ltd [2019] 6 HKC 582.  Based on principles approved in Takhar v Gracefield Developments [2019] UKSC 13, Kwan VP set out the following legal principles at §72:

“(1) there must be "conscious and deliberate dishonesty" in relation to the relevant evidence given;

(2) the fresh evidence must be "material", in that it demonstrates that the previous relevant evidence, action, statement or concealment was an operative cause of the court's decision to give judgment in the way it did, or that it would have entirely changed the way in which the first court approached and came to its decision; and thus the conscious and deliberate dishonesty must be causative of the impugned judgment being obtained in the terms it was; and

(3) the question of "materiality" of the fresh evidence is to be assessed by reference to its impact on the evidence supporting the original decision, not by reference to its impact on what decision might be made if the claim were to be retried on honest evidence.”

58.  At §74 in Mayer Corporation, Kwan VP explained the requirement that the further evidence must be ‘new’ as follows:

“The requirement that the further evidence is ‘new’, and not simply additional evidence to improve and elaborate on the existing evidence, goes hand in hand with the ‘materiality requirement’. If the further evidence is just ‘more of the same’, it might not have satisfied the ‘materiality’ requirement applying the criterion in the Highland case”.

59.  At §70, Kwan VP held that it was inappropriate to determine whether a requirement of reasonable diligence must be met by an applicant to set aside a judgment where new evidence is deployed to establish the fraud raised in the earlier proceedings unsuccessfully. 

60.  Before turning to the application of these principles to the facts, it is important to view this intended cause of action in its proper context.  The HCSD Judgment determined the limited question of whether there was a bona fide dispute of the debt on substantial grounds. But the present proceedings are commenced to recover precisely the same sum.  If the Plaintiff prevails in these proceedings, then the Plaintiff would obtain a judgment and could seek to enforce it as a judgment creditor.  In these proceedings, the Plaintiff is entitled to advance its case at trial with the benefit of oral evidence and cross-examination.  However, if the Plaintiff does not prevail, this would only serve to prove that the HCSD Judgment was correct in deciding that it was wrong to have issued the statutory demand in the first place.

61.  As a matter of substance, the only live issue arising from the HCSD Judgment is in reality the adverse costs order against the Plaintiff under the HCSD Costs Order.  As I see it, the only substantive purpose of this cause of action is to reverse that costs order.  As stated above, the costs involved are HK$650,686.70, and there was no appeal against that costs order.  The application to amend to introduce this fresh cause of action should be viewed in this perspective.

62.  The court should have regard to a sense of proportionality in considering whether to permit what is effectively a collateral challenge against a previous costs order made in different proceedings.  In the context of a claim of malicious prosecution seeking to claim costs above what was ordered in previous proceedings, I held in Lee See Woo v Chu Hong Pong [2020] HKCFI 2569 at §38 that:

“To permit re-litigation would amount to a collateral challenge to a prior order of the court and would be contrary to the principles of finality and certainty. To allow such a claim would, in most cases, likely be disproportionate and lead to a waste of judicial resources.”

63.  In my view, those observations are equally apposite in the present context.  Mr Lam accepted that the court is entitled to have regard to proportionality in deciding whether to allow the amendments.  Under RHC Order 1A, rule 1(c), the underlying objectives of the RHC include promoting ‘a sense of reasonable proportion and procedural economy in the conduct of proceedings’.  I have serious reservations about whether it would be appropriate to re-open the HCSD Judgment merely to overturn a previous costs order for amount involved.  In my view, this completely lacks a sense of reasonable proportion and procedural economy.  These are matters of considerable weight against allowing the amendment.

64.  The proposed amendments in relation to the intended cause of action are set out in Draft ASOC at §§24-26.  However, the vast majority of the matters pleaded are either not ‘new’ evidence or merely arguments which were already considered in the HCSD Judgment in evaluating the defences based on agency raised by the Defendant.  It is an abuse of process to seek to overturn the HCSD Judgment by reason of evidence which was already adduced before the court, or arguments which had already been made and considered previously.

65.  To illustrate:

(1)  Draft ASOC §26.1 refers to the fact that there were approximately 14 occasions on which the Plaintiff transacted with the Defendant after their first encounter on 25 July 2017.  However, the previous dealings between the Plaintiff and the Defendant were already covered in the Plaintiff’s evidence in the HCSD proceedings.

(2)  Draft ASOC §26.2 refers to the fact the Plaintiff had decided in January 2017 to cease Tat Shing’s business.  This was a point made both in evidence and in submissions in the HCSD proceedings already.

(3)  Draft ASOC §26.3 refers to the Plaintiff’s contention that she entered into the foreign currency transaction in order to provide a personal loan to Best Year.  This is not fresh evidence, and in any event, the contention was considered by the HSCD Judgment at §27 where the court held that this did not mean that the underlying foreign exchange transaction was not undertaken by the Plaintiff in her personal capacity.

(4)  Draft ASOC §26.4 refers to police statements made by the Defendant.  This was considered by the HCSD Judgment at §38, where it was concluded that this is a matter for trial.

(5)  Draft ASOC §26.5 set out the Plaintiff’s case that there is no evidence showing how the Defendant acted as Kwok Hing’s agent. This is not an allegation of fresh evidence being involved, and further, the same contention was raised by the Plaintiff in the HCSD proceedings with detailed written submissions made to the court to that effect already.

66.  Apart from my concerns about the sheer lack of proportionality in seeking to introduce this cause of action, viewing the proposed amendments as a whole, I find that it is objectionable for the Plaintiff to now rely on evidence which was squarely before the court before, or on arguments which have already been considered, in the context of a purported claim to set aside a judgment by reason of fraud.  In substance, this is an attempt at impermissible re-litigation, which should be strongly discouraged.  Further, in my judgment, there has been no real attempt to properly formulate a viable cause of action to set aside a judgment by reason of it having been obtained fraud, and no identification of what new evidence is said to be material in the manner described in Mayer Corporation.

67.  In my judgment, the only matter which even begins to form the semblance of a point of any real consequence was the fact that, as pleaded in Draft ASOC §26.5(1)-(7) that there was a lack of discovery in the present proceedings by the Defendant to substantiate its argument that it only acted as the agent of Kwok Hing.  I have doubts as to whether this can be considered as ‘fresh evidence’, but as I have mentioned above, the lack of documentation from the Defendant in this regard was a point heavily relied upon already by the Plaintiff in the HCSD Proceedings.  To borrow the terminology used in Mayer Corporation at §74, the lack of discovery in this regard may be regarded as ‘more of the same’.  In addition, there is nothing stopping the Plaintiff from exploring the point at trial in the present proceedings.    

68.  For these reasons, I reject the Plaintiff’s application to introduce a claim to set aside the HCSD Judgment. 

CONCLUSION

69.  For these reasons, I dismiss the Plaintiff’s application.  I make a costs order nisi that the Plaintiff pay the costs of this application to the Defendant, to be taxed if not agreed.