YINGGAO RESOURCES LTD AND ANOTHER v. THE HONGKONG AND SHANGHAI BANKING CORPORATION LTD

HCA 329/2015

[2022] HKCFI 306

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

ACTION NO 329 OF 2015

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DECISION

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A.  Introduction

1.  This is the Plaintiffs’ (Ps’) application to re-amend its Amended Statement of Claim by way of a Summons dated 12 August 2021.

2.  As detailed below, the Defendant (D) opposes the amendments on 4 grounds:-

(a)  Time Bar (Issue 1);

(b)  the claim brought about by the amendments are bound to fail, due to issues with:-

(i)  Ps’ lack of standing to sue/locus (Issue 2);

(ii)  causation (Issue 3); and

(iii)  remoteness (Issue 4).

B.  Background

B.1  The Amended Statement of Claim (ASoC)

3.  In summary, Ps’ case, as per its original ASoC, was as follows:-

(a)  On 25 Sep 2014, pursuant to a judgment in CACV 219/2013, HK$26M and US$2.24M was ordered to be paid by Citibank to P1 [ASoC §§9, 14]. The monies were eventually deposited into P1’s account kept with D on 25 and 26 Nov 2014 [ASoC §§23, 24].

(b)  Ps engaged in sales and purchasing contracts in relation to scrap copper in an around October/November 2014 (the Scrap Copper Contracts).

(i)  There was an agreement whereby P2 agreed to purchase scrap copper from a company named Midas [ASoC §§18, 21].

(ii)  There was an agreement whereby P2 agreed to sell scrap copper to a company named Hongsen [ASoC §§19, 22].

(iii)  P1 acted as guarantor to P2’s obligations [ASoC §§18(5), 19(3), 21(7), 22(3)]

(c)  To fulfil P2’s obligation under the purchase agreements, on 28 Nov 2014:-

(i)  P1 sought to transfer monies from P1’s account with D to P2’s account with D [ASoC §30];

(ii)  the purpose of such transfers was for payment to Midas under the Scrap Copper Contracts [ASoC §31].

(d)  However, D refused to honour the instructions [ASoC §38]. D’s refusal is related to a letter issued by the Customs & Excise Department, colloquially known as a “no consent letter”.

(e)  Ps then argues that, in failing to honour Ps’ instructions:-

(i)  D is in breach of its contractual mandate against P1 [ASoC §46].

(ii)  Alternatively, D owes a tortious duty of care to P1 and P2 and is in breach of such duty in failing to give effect to P1’s instructions [ASoC §48].

(f)  As a result, it is said that D is liable for damages arising out of P2’s breach of the sale and purchase contracts with Midas and Hongsen [ASoC §55].

B.2  Draft Re-Amended Statement of Claim (RASoC)

4.  By this application, Ps seek to re-amend its ASoC. The draft RASoC attached to the Summons contains a large number of amendments, although quite a number of them are stylistic.

5.  Substantively, four main areas of additions can be identified.

(a)  Addition 1: §49, which consists of 14 sub-paragraphs, can be roughly termed the “Gold Mining Agreement” (GMA) amendments. In gist, Ps’ case is that:-

(i)  Due to a number of agreements entered into by P1 (via a company named Winko), P1 was entitled to mineral rights in the PRC provided that P1 fulfilled its obligations under the agreements [ASOC §49.13].

(ii)  Due to D’s breach of contractual mandate or the tortious duty of care, Ps failed to fulfil its obligations under those agreements and had the mineral rights confiscated, resulting in losses [ASOC §49.14].

(b)  Addition 2: §50 provides that, due to D’s breach of contractual mandate or the tortious duty of care, P1 failed to pay security for costs in HCA 964/2012, as a result of which losses were suffered.

(c)  Addition 3: There is a plea titled “Reasonable Time Limits”, which at first glance, appears to be a plea in relation to postponement of time bar:-

(i)  §§51-52 pleads the process by which Ps were able to obtain C&E’s no consent letter on 14 May 2021.

(ii)  §53 alleges that the contents of the no consent letters were inconsistent with statements made by the staff of D at various times in 2014, and also in the Defence.

(iii)  §54 then goes on to allege that the said statements by the staff of D were false, and that they did not believe such statements were true. It then goes on to allege that “As the truth was concealed, the reasonable time limit shall begin to run from the date of the “disclosure” of the letter by the Defendant on 14 May 2021”.

(d)  Addition 4: At the first paragraph in §55, there is a plea for claim for “aggravated, punitive and/or constitutional damages” due to the defendant’s tortious conduct in obtaining Ps’ property by deception and/or unlawful deprivation of the plaintiff’s property, in breach of Article 105 of the Basic Law. There also appears to be related pleas at:-

(i)  §42;

(ii)  §55(1), where losses are said to result from misappropriations of property by inter alia D;

(iii)  The reference to §55(1) in prayer for relief at para (2).

(iv)  prayer for relief at para (3).

C.  Ps’ Changes of Stance and Latest Position

6.  5 days before the hearing on 18 January 2022, Ps put forward a revised version of the draft RASoC; with further revisions trickling in on 14 January 2022. However, no formal application for amending the original Summons was made.

7.  Not surprisingly, Mr Fung SC (together with him Mr Brian Lee) complained about the lateness of these revisions in their Skeleton filed on 14 January 2022.

8.  Early on the day of the hearing, Mr Alan Ng (together with him Mr Ivan Lee), acting for Ps, filed a Note of Reply. Therein, Mr Ng confirmed that Ps will only proceed with the original draft RASoC, and not the further revised versions. Mr Ng also made it clear that he is not going to pursue Addition 2, ie, the claim in relation to HCA 964/2012.

9.  At the hearing, I also clarified with Mr Ng his stance as to the remaining Additions, as he had not made submissions on all of them.

(a)  As to Addition 3, Mr Ng submits that these were background facts, rather than constituting any cause of action. Nor is postponement relied upon as a ground to extend the limitation period (as discussed below). On this basis, I am not minded to allow these additions, especially when, as summarized above, Addition 3 contain serious allegations of fraud to which no properly pleaded cause of action attaches.

(b)  As to Addition 4, Mr Ng’s position is that he would not make any submissions thereon, although he has no instructions to abandon them. In this regard, I agree with Mr Fung SC’s submissions that they should not be allowed in, as the case Harvest Good Development Ltd v Secretary for Justice (HCAL 32/2006, 16 July 2007) at §138 makes it quite clear that Art.105 of the Basic Law relates to compensation for expropriations of property by the State, not private individuals.

10.  The main bone of contention is therefore Addition 1.

D.  Addition 1 – the Gold Mining Agreements

11.  Before embarking on any analysis, it would make sense to first understand in a little bit more detail the pleas made by Ps in this regard.

D1.  The Pleas

12.  With no disrespect to the drafter(s) (not Mr Ng and Mr Lee), the pleas are rather convoluted and not the easiest to understand. Quite a bit of interpretation and reasoning is required to decipher the exact order of events. My best understanding of the pleas are as follows.

13.  On 23 February 2011, a company named Winko and a Mr Xu entered into a Gold Mining Agreement (GMA) to set up a JV to hold a gold mining project [RASoC §49].

(a)  In entering into the agreement, it is alleged that Winko acted as a representative/trustee of P1. A declaration of trust appears to show that Winko held 80% of the JV for P1.

(b)  Under the agreement, Winko had to pay RMB40M, RMB 40M and RMB 30M by 23 February 2012 (the 3 Tranches) [RASoC §49.2(1)].

(c)  Further, once exploration reports are issued, Winko needs to attend the local Government bureau to register the existence of the JV Co.

(d)  Once the JV Co is set up and the business licence obtained, there will then be further obligations on the part of Winko to inject capital into the JV Co, the quantum being:-

(i)  RMB 400M within 30 days; and

(ii)  another RMB 400M within 120 days (the Capital Injections).

14.  Pursuant thereto, Winko paid the first 2 of the 3 Tranches in full.

15.  However, only RMB 10M out of the RMB 30M was paid for the 3^rd Tranche, due to Custom & Excise’s freezing of P1’s account then kept with Citibank [RASoC §49.6].

16.  Despite Winko’s breach, the GMA was apparently varied (in Dec 2014).

(a)  According to Ps, the Capital Injection amount is reduced to RMB200M, which Ps say Winko intends to pay with a loan to be taken out by Hongsen.

(b)  The said loan, however, requires the payment of a deposit of RMB20M.

(c)  Ps allege that the RMB20M was to be satisfied out of amounts payable by Hongsen to P2 under the Scrap Copper Contracts.

17.  Ps then allege that due to D’s breach of mandate and/or duty of care:-

(a)  the Scrap Copper Contracts cannot be completed;

(b)  Hongsen is no longer liable to pay P2 under the Scrap Copper Contracts, and the source of the RMB20M deposit evaporated;

(c)  this led to the failure of the RMB200M loan, whereby Winko failed to pay the Capital Injection;

(d)  Winko’s interest in the mines, which is held for P1, became valueless [RASoC §49.14].

D.2  Issue 2 - Lack of Standing to Sue or Locus

18.  I start with D’s objection based on lack of locus. In gist, D argues that, given Winko and not Ps is the party to the GMA, Ps have no standing to sue for losses. D also makes the point that even if Winko were a trustee for P1, this does not make P1 the proper plaintiff, as it would normally be for the trustee to sue.

19.  In response, Ps argue that this point is a red herring, as the claim herein is not one of breach of GMA.

20.  I agree with Ps on this point. The causes of action relied upon herein are breach of mandate and/or breach of the tortious duty of care by D. It is not dependent on the GMA and who the parties are to it. The GMA is the background against which it is said Ps had suffered loss.

D.3  Issue 3 - Lack of Causation

21.  D’s second objection is based on lack of causation. As I understand it, D claims that there is an insufficient causal link between the alleged breach and the loss.The point is framed by D as follows:-

(a)  On Ps’ pleaded case, Winko is obliged to pay 3 tranches of capital contribution totalling RMB 100M on or before 23 Feb 2012 [RASoC §49.2(1)].

(b)  RMB 80M had been paid [RASoC §49.3]. The alleged inability to pay must relate to the remaining RMB 20M [RASoC §§49.5-6].

(c)  However, by the deadline for payment (i.e., 23 Feb 2012), the monies were not yet with D. Instead, they were with Citibank.

(d)  As such, D could not have been the reason why Winko failed to pay the capital contribution.

22.  Based on my understanding of the pleas (see §§12-16 above), Ps’ case is not that the losses claimed arose out of the failure to pay RMB 20M (as referred to in §14 above).

23.  Instead, it is tolerably clear that such obligation had been said to be varied in December 2014, whereby the obligation became one to inject RMB 200M as capital (see §15 above).

24.  As to the causation chain, so far as I understand it, Ps’ case is that:-

(a)  The breach of mandate/duty caused the failure of the Scrap Copper Contract.

(b)  The failure of the Scrap Copper Contract made it impossible to pay the RMB20M required to be paid to raise the RMB 200M Capital Injection under the revised GMA, and this caused loss to P1 (see §16 above).

25.  Based on the above, it appears to me that one can see a but for causation link (albeit only after some interpretation and reasoning, as I noted at §12 above). While I must say the plea is far from perfect, given the relatively low threshold at the amendment stage, I do not think that the pleas are bound to fail for lack of a valid plea of causation. Of course, it may be that upon further and better particulars and information discovered the convoluted causation chain may be found to be unsustainable – but this is a matter for another day.

D.4  Issue 4 - Remoteness

26.  Moving on to remoteness, D’s point is simple – even if there is but for causation, the claimed losses are far too remote, no matter whether one applies contractual or tortious remoteness principles.

27.  In support of this point, Mr Fung SC points to the fact that, while express pleas had been made in the SoC as to Ps’ putting D on express notice that the instructions for payment were made to satisfy the Scrap Copper Contracts, no such pleas had been put forward in relation to the new losses in relation to the GMAs, Mr Fung SC further points out that causation depends on knowledge, and knowledge is something which has to be specifically pleaded under general pleading principles.

28.  In response, Mr Ng makes two main points.

(a)  First, he makes the point that there is no legal requirement to plead remoteness. As such, the issue of notice/knowledge is not something for Ps to plead and the lack of such cannot be a ground upon which to refuse an amendment.

(b)  Second, he argues that, even on the principles set out in the CFA case of Richly Bright International Ltd v De Monsa Investments Ltd (2015) 18 HKCFAR 232, there are two types of losses which are not barred by remoteness:-

“18. The two limbs are “the practical expression of a single principle … that parties should only be liable for damages which were when they contracted within their contemplation in the event of a breach”[10] and both limbs turn on an objective assessment of what the contract-breaker knew or ought to have known. As Lord Walker of Gestingthorpe observed in Jackson v Royal Bank of Scotland plc:[11]

“The common ground of the two limbs is what the contract-breaker knew or must be taken to have known, so as to bring the loss within the reasonable contemplation of the parties”.

19. The first limb encompasses damages that are “such as may fairly and reasonably be considered [as] … arising naturally, i.e. according to the usual course of things, from such breach of contract”. Since every reasonable person is taken to know of the damage which flows “naturally” from a breach of the contract to which he is a party, this knowledge is imputed to a contract-breaker. In the second limb, actual knowledge is required in respect of special circumstances giving rise to damage which cannot be said to result naturally from such a breach of contract. Where the first limb is relied upon, the horizon of contemplation is confined to loss which arises naturally in the usual course of things and which is therefore presumed to have been within the parties’ contemplation. Under the second limb, the horizon of contemplation is extended to loss that does not arise in the usual course of things but which flows from the circumstances of which the contract breaker had actual knowledge.” [emphasis added]

(c)  In the present case, Mr Ng says he is entitled to rely on the first limb, ie imputed knowledge from the factual matrix, and thus there is no need to plead actual knowledge specifically.

29.  As to the first point, the issue, it seems to me, boils down to this: for pleading purposes:-

(a)  is “lack of remoteness” an element of causation (which Ps must plead right at the outset); or

(b)  is remoteness a doctrine which is more of an issue to be pleaded in defence to sever causation even if but for causation can be established?

30.  In this regard, both parties had not cited any cases. One therefore has to fall back on first principles. While there is some attraction to the intuitive point that the law has separated out the concept of remoteness from causation and placed it as a separate heading, which lends some weight to the idea that it is a “positive defence” of some sort, on proper analysis, it would seem to me that this is no more than a convenient frame of analysis which does not actually shift any burdens. The tests for the concept, ie, whether the loss is within the reasonable contemplation of the parties, or assumption of responsibility, appear to be more of facts for the plaintiff to prove rather than points for the defendant to prove.

31.  Despite the attractive way in which it was put, therefore, I do not accept Mr Ng’s first point.

32.  As to the second point, the existence of an imputed limb means that there is no need for Mr Ng to plead the state of actual or constructive knowledge of D per se, unless the pleaded losses flow so un-naturally from the breach such that, even at this early stage, one must conclude the imputed limb cannot be relied upon, bearing in mind that amendments are only disallowed if they are bound to fail.

33.  On the present facts, I fully understand why the remoteness point is taken by Mr Fung SC – the chain of causation of the GMA losses is convoluted – and no doubt remoteness is an issue that comes to mind.

34.  In fact, if one thinks about it, here, the claim is breach of the duty to follow an instruction to make payment of money; the most ‘natural’ loss is that Ps had been deprived of use of such monies, which would be compensated by time value of money. The issue, however, is, going one step further, whether consequential business losses is also a loss that flows ‘naturally’ from the alleged breach. At this stage, I find this a difficult question to answer, especially when:-

(a)  Before me, there are no authorities giving guidance as what is regarded as ‘natural’ losses arising out of a similar factual matrix (eg, other breach of bank mandate cases).

(b)  Neither had there been an analysis of the contractual matrix (ie terms in the banking contract etc) which may highlight the contemplation and allocation of risks.

35.  As such, I am unable at this stage to conclude that the losses claimed herein must be regarded as not flowing naturally from the breach (such being a product of the test being that to refuse amendment the amended claim must be one which is bound to fail). I therefore reject the objection to the amendment based on remoteness on the contract claim.

36.  For the sake of completeness, I would note that the parties have not focused their submissions in this respect on the tort claim. This is probably for the reason that that, as per the CFA in Richly Bright (supra) at §24, the rules of remoteness for tort are generally more generous to the plaintiff (albeit there is clearly an argument that, when there are concurrent tort/contractual liabilities, the contractual test for remoteness should apply). Given I cannot be sure that Ps’ claim is remote for contract purposes, I will also not debar the amendment for tort on remoteness grounds as well.

D.5  Issue 1 – Time Bar

37.  This brings us to the most complicated point – time bar.

38.  The parties are ad idem that I should apply the 3 stage approach applied by Ng J in Shenzhen Futaihong Precision Industry Co Ltd v BYD Co Ltd (HCA 2114/2007, 18 July 2016) at §16, being:-

(a)  Stage 1: Is it reasonably arguable that the opposed amendments are outside the applicable limitation period? If not, then the amendments fall to be considered in accordance with the general principles governing amendment applications.

(b)  Stage 2: If the answer to (1) is yes, do the proposed amendments seek to add or substitute a “new cause of action”? If not, then again the amendments fall to be considered in accordance with general principles.

(c)  Stage 3: If the answer to (2) is yes, does the new cause of action arise out of the same or substantially the same facts as are already in issue in the existing claim? If not, the amendments cannot be allowed. If yes, then the court retains a discretion to allow or refuse the amendments in accordance with general principles.

39.  I will deal with each stage in turn.

Stage 1

40.  Mr Ng had very fairly made no submissions on this Stage; he made no reliance on the postponement of limitation based on the matters pleaded as Addition 3.

41.  I therefore assume that Stage 1 is satisfied.

Stage 2

42.  The first fundamental question to answer is what constitutes a “cause of action” for the purposes of this stage.

43.  A useful starting point would be the Court of Appeal’s decision in Shenzhen Futaihong Precision Industry Co Ltd v BYD Co Ltd [2019] 2 HKC 17 at §81:-

“For the definition of a “cause of action”, one has regard to various dicta in the following cases:

“A cause of action is simply a factual situation the existence of which entitles one person to obtain from the court a remedy against another person.”

(Letang v Cooper [1965] 1 QB 232 at 242 to 243)

“A cause of action is that combination of facts which gives rise to a legal right.”

(Berezovsky v Abramovich [2011] 1 WLR 2290 at §59)

““Cause of action” has been held from the earliest time to mean every fact which is material to be proved to entitle the plaintiff to succeed, every fact which the defendant would have a right to traverse.”

(Cooke v Gill (1873) LR 8 CP 107 at 116)

“Euhhvery fact which it would be necessary for the plaintiff to prove, if traversed, in order to support his right to the judgment of the Court. It does not comprise every piece of evidence which is necessary to prove each fact, but every fact which is necessary to be proved.”

(Read v Brown (1888) 22 QBD 128 at 131)

“The language I used obviously means this: the plaintiff in order to make out a cause of action must assert certain facts which, if traversed, he would be put to prove. … In former times, if he failed to assert any of those facts, his declaration was demurrable as shewing no cause of action.”

(Coburn v Colledge [1897] 1 QB 702 at 706 to 707)”

44.  In my view, the above passages (especially the passage from Coburn) suggest that, in determining what are the facts constituting a “cause of action”, the litmus test is whether the facts must be pleaded to sustain a claim and avoid it being struck out. The discussion in §§82-85 of Shenzhen Futaihong (CA) appears to me to confirm this approach, various cases being cited, with the conclusion being that before comparing the old and the new pleadings, one has to boil the pleadings down to “the essential factual elements”.

45.  This is further confirmed by another case dealing with time bar issues, Arta Properties Ltd v Li Fu Yat Tso (HCA 2741/1998, 5 January 2007), whereby Recorder Paul Shieh SC had this to say:-

“These definitions focus on the pleading of material facts sufficient to give rise to a claim that is not susceptible to being struck out.”

46.  It will therefore be necessary to separately analyse the breach of mandate claim (based on contract) and the breach of duty of care claim (based on tort). The constituent elements of the claims are different, as loss is not an essential element of the contract claim, but is essential to the tortious claim.

Contract

47.  It is not really disputed that, in essence, the GMA amendments relate to loss. As loss is not an essential element of the contract claim, one would have thought the GMA amendments will not lead to a new cause of action.

48.  In this regard, Mr Fung SC relies upon the case of Arta Properties (supra) for the proposition that “A claim based on a different contract from that originally pleaded raises a new cause of action.” While I agree with this proposition, I do not think it is applicable to the present case. While the GMA is a new contract, that is not the contract being sued upon.

49.  In my view, therefore, the GMA amendments do not add a “new cause of action” for Stage 2 of the limitation analysis insofar as the breach of mandate claim is concerned.

Tort

50.  There appears to be no dispute that, in the tort of breach of duty in the present case, loss is an essential element.

51.  If so, the general principles stated above tend to support the idea that by adding new losses, the GMA amendments will constitute a new cause of action.

52.  Mr Ng, however, tries to persuade me that the approach to loss, as opposed to other elements of the tort claim, is more generous. For this, he heavily relies on the case of Berezovsky v Abramovich [2011] 1 WLR 2290.

53.  In that case, the cause of action was the tort of intimidation. Similar to the present case, the writ was taken out within the limitation period but amendments were then sought outside the prima facie time period. Mr Abramovich objected on the basis that the amendments meant that a new cause of action had been pleaded.

54.  The Court then went on to identify the “essential facts” which constitute the tort, such being [§62]:

(a)  The threat by Mr Abramovich to procure expropriation of Mr Berezovksy’s interest;

(b)  Mr Abramovich’s intention to coerce Mr Berezovsky to dispose of his interest;

(c)  Mr Berezovsky was coerced into disposing of his interest;

(d)  Mr Berezovsky suffered loss as a result.

55.  It is thus clear that, like the tort herein, the tort of intimidation also has loss as an essential element. Longmore LJ then had this to say:-

“62…In these circumstances no new cause of action is alleged in the proposed amended pleading unless it can be said that once a claimant has particularised his loss, for example (to take the example used in argument) by alleging the loss or theft of his cat, he cannot thereafter allege the loss or theft of his dog. As Mr Popplewell put the argument: a pleader can particularise a general allegation but, once he has so particularised it, he cannot regeneralise the particular without alleging a new cause of action.

63 It may indeed be the case that if a claimant, suing in tort, substitutes by amendment a different kind of loss from that originally pleaded, he will be asserting a new cause of action, but that will not always be so. One needs to know more of the facts of the case before one can confidently assert that the claimant is proposing to substitute a new cause of action. If an act of violence constituting a single breach of duty causes the loss of both a cat and a dog, the claimant would not be substituting a new cause of action if he substituted the word “dog” for the word "cat” but would be relying on the original cause of action which had caused loss. He would be substituting a new loss for the old loss but would not be substituting a new cause of action for the original cause of action. If on the other hand the claimant was relying on a second and distinct act of violence causing a loss at some different time from the loss originally caused to the cat, he would no doubt be relying on a different cause of action.

64 Thus the addition or substitution of a new loss is by no means necessarily the addition or substitution of a new cause of action. For a cause of action to arise in tort there must be a breach of duty which causes loss but it is permissible to add or substitute further losses if they all stem from an original breach of duty which has caused some loss. This happens every day in personal injury claims in which a loss of earnings claim may be added to (or substituted for) a claim for loss and suffering, even after the original time bar has expired; there is no question of a new cause of action being added or substituted because the loss all stems from the negligent act of the car driver or other tortfeasor…” [emphasis added]

56.  Applying these principles, Mr Ng argues that the GMA pleas do not change the duty which is said to be breached (ie, the bank’s duty to take care in handling instructions) – he is adding a new loss for the same breach.

57.  Mr Fung SC’s response, it appears, is as follows. He does not dispute Berezovsky and indeed states that he relies upon it. He highlights the fact that, at §64 thereof (cited above), the English Court of Appeal used the words “by no means necessarily”, thus indicating that the test is not cut and dried and is fact sensitive. He further relies on the case of Steamship Mutual Underwriting Association Ltd v Trollope & Colls (City) Ltd 33 BLR 77 at 78, whereby May LJ had this to say:-

“In the present case, if one remembers what a cause of action is…if one looks to the size of this particular building, to its complexities…I feel bound to agree with the learned judge where he concluded, the statement of claim in both its original and amended form related only to the air conditioning… In the light of the definitions of a cause of action already referred to, I do not think one can look only to the duty on a party, but one must look also to the nature and extent of the breach relied upon, as well as to the nature and extent of the damage complained of in deciding whether, as a matter of degree, a new cause of action is sought to be relied upon…” [emphasis added]

58.  On this basis, Mr Fung SC submits that a common sense approach has to be taken – the said to be colossal losses based on the GMAs has a wholly different factual basis, and is suffered at a different date. On any view, he says, it is so different that it must constitute a new cause of action.

59.  I can see much force in Mr Fung SC’s argument. If one had to look at the test purposively, drastic changes in the pleaded losses after an extended period of time creates the same evidential difficulties as changes in other elements of the cause of action. Normatively, there is much to be said about taking a broad view of matters and relying on intuition, rather than hard principles.

60.  However, in my view, time limits are never simply about broad justice, and a certain level of technicality is involved in the constant struggle between the certainty of bright line rules and the need to do justice in an individual case. On the case law, it appears to me that the proper approach may well be this.

(a)  As I see it, Berezovsky is the case that is more specific to the issue of substitution/change of pleas of losses. In effect, its ratio boils down to this – the essential element that constitutes the cause of action is that the plaintiff suffered loss as a result of the pleaded breach – rather than the fact the plaintiff suffered a specific loss therefrom.

(b)  As such, insofar as the change to the plea of losses is not dependent on the need to plead a different duty or breach thereof (which are other essential elements of the cause of action), no new cause of action is constituted for time bar purposes.

(c)  Of course, as is well known, in tort, the questions of scope of duty, breach, causation and loss are intertwined – and sometimes issues can be slotted into one category or another – depending on the framework of analysis adopted.

(d)  Cases such as Steamship Mutual therefore simply remind us to avoid allowing the framework of analysis to cloud the overall picture – in some cases, drastic changes to the losses pleaded may indicate that what is in effect being changed is the scope of duty and/or the breaches complained of.

61.  Applying this approach, my view is that, on the facts of this case, the GMA pleas proposed to be added herein arise from the same alleged breach of mandate/duty, and do not reflect any change to the essential elements of the cause of action. The change in pleaded loss cannot be meaningfully reframed as one of shift in the scope of duty and/or the circumstances of the breach.

62.  In my view, therefore, the GMA amendments do not add a “new cause of action” for Stage 2 of the limitation analysis insofar as the tort claim is concerned as well.

63.  It is thus unnecessary to deal with Stage 3.

E.  Conclusion

64.  For the reasons above, I will only allow amendments in relation to Addition 1.

65.  The costs orders nisi is as follows:-

(a)  Costs of the application up till 15 September 2021 be to D, to be payable in any event and to be taxed if not agreed;

(b)  20% of costs thereafter be to Ps, to be payable in any event and to be taxed if not agreed, with certificate for two counsel;

(c)  Costs of and occasioned by the amendments be to D, to be payable in any event and to be taxed if not agreed.

66.  The reason I have only allowed Ps 20% of costs is as follows:-

(a)  While they can be seen as the overall winner, 3 out of 4 Additions were abandoned and/or not allowed.

(b)  Ps’ change of stance (see §§6-8 above) generated much inconvenience for the Court and inconvenience and costs on the part of D. Ps must be held responsible.

(c)  There is also an additional procedural issue concerning the filing of a further affirmation by Ps without leave. Master Rita So first gave an order for filing of an affirmation in support on 24 August 2021. Ps filed the Affirmation of Chun Yuet Ming Jessica on 7 September 2021 accordingly. However, without leave, a further affirmation, the 2^nd Affirmation of Chin Kam Chiu, was filed on 15 November 2021. This is not permissible.

67.  Finally, I would like to thank Counsel for their invaluable assistance.