SUN CHEONG CONSTRUCTION CO LTD v. THE INCORPORATED OWNERS OF KING FU, HO FU, KI FU & KA FU BUILDINGS

HCCT 27/2010

[2018] HKCFI 1181

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

CONSTRUCTION AND ARBITRATION PROCEEDINGS

NO 27 OF 2010

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D E C I S I O N

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1.  By its summons issued on 18 April 2017 (and amended on 12 May 2017), the Defendant seeks leave to further amend its Amended Defence and Counterclaim (“Defence”). These amendments are opposed by the Plaintiff, on the ground that the amendments are unnecessary, are doomed to fail for lacking factual support, or constitute a new claim arising from different facts as originally pleaded and relied upon, such that they should be disallowed for being time-barred.

2.  The Plaintiff’s claim against the Defendant in this action is for payments alleged to be due under a contract made between the Plaintiff and the Defendant on 15 December 2006 (“Renovation Agreement”), for repair, renovation and maintenance works (“Works”) to be carried out by the Plaintiff at an estate in Hunghom comprising 4 residential blocks (“Buildings”). The Plaintiff claims that upon completion of the Works, a sum of $1,443,923.54 was withheld and retained by the Defendant, and by institution of these proceedings in October 2009, the Plaintiff seeks payment of the said amount.  The trial of the action has been fixed for February 2019.

The relevant original pleadings in the Defence

3.  By way of defence and counterclaim, the Defendant alleges that the Plaintiff had failed to complete the Works (paragraph 9 of the Defence), was in breach of the express and/or implied terms of the Renovation Agreement, and/or was negligent, inter alia, in “failing to remove various foreign objects on the external walls of the Buildings” (paragraph 10 of the Defence), as particularized in item 1 of Appendix B to the Defence (“Appendix B”) (“Foreign Objects Claim”), and in failing to carry out the Works with proper skill and care or to the agreed contractual standards (paragraph 13 of the Defence).  The Defendant claims that as a result of the Plaintiff’s alleged breach of contract and/or negligence, “parts of the Works executed by the Plaintiff were defective” (paragraph 13 of the Defence). Particulars of the defective Works were pleaded in paragraph 13 of the Defence, as set out in items 3 to 7 of Appendix B (“Defective Works Claim”).

4.  Item 1 of Appendix B particularizes the Foreign Objects Claim, and claims that this was in breach of clauses 1.1 and 3.1 to 3.4 of one section of the Particular Specification of the Renovation Agreement entitled “removal of foreign objects on external walls” (“Removal Clause”).

5.  In relation to the Defective Works Claim, paragraph 13 of the Defence refers to Item 3 of Appendix B, which particularizes the Plaintiff’s allegedly defective repair work to the external walls.  These refer to the Plaintiff’s alleged failure to carry out the hammer tapping test with skill, failure to identify and remove defective concrete, and failure to carry out the necessary repair work on the external wall.  Paragraph (3) of item 3 states that as a result of the Plaintiff’s failures, “the wall surface at various locations as shown in Annex 2 hereto were found to be detached and/or defective upon hammer tapping test carried out shortly after the alleged completion of the Works.” Annex 2 lists a total of 145 items of defective hollow parts of the external wall.

The proposed amendments

6.  The Defendant seeks to amend the Defence by referring, in paragraph 10 and item 1 of Appendix B, to clauses 3.1 and 4.4 of the section of the Particular Specification of the Renovation Agreement entitled “renovating external wall” (“Renovating Clause”).

7.  The Defendant further seeks to include a new paragraph (3A) under item 3 of Appendix B, to read:

“Similar type and extent of defects to those revealed upon inspection over the surveyed parts of the external wall (as depicted in Annex 2) also exist in other parts of the external walls with a total of around 3000 locations of hollow/debonded wall surface.”

8.  After hearing the parties and having considered the submissions made by counsel, I allow the amendments sought by the Defendant, for the following reasons.

9.  The Plaintiff claims (in the 2^nd affirmation of Chan Ka Kuen) that the Defendant seeks, by the amendments to items 1 and 3 of Appendix B, to rely on new claims and new causes of action which are time-barred.  By the time skeleton arguments were filed on behalf of the Plaintiff, Counsel appears to have confined the “new cause of action” argument to the item 3 amendments, complaining only that the amendments to item 1 and the pleading of clauses 3.1 and 4.4 are unnecessary, and hence should not be allowed.

“Cause of action”

10.  Both Counsel seek reliance on the meaning of “cause of action”, by reference to the oft cited case of Letang v Cooper [1965] 1 QB 232, where Diplock LJ explained a cause of action to be simply “a factual situation the existence of which entitles one person to obtain from the court a remedy against another person”.  It is worth noting that the same set of facts may give rise to 2 or more causes of action. 

11.  The addition of further particulars or instances does not amount to a distinct or new cause of action.  Where the same duty and same breach is pleaded, new or different loss will not be a new cause of action. (Berezovsky v Abramovich [2011] 1 WLR 2290, Diamandis v Wills [2015] EWHC 312 (Ch))

12.  In the judgment of Longmore LJ in Berezovsky v Abramovich (at pages 2309-2311), it was explained thus:

“59…. A cause of action is that combination of facts which gives rise to a legal right. A cause of action in tort has, as its essential ingredients, a plea of duty, breach of duty and consequent damage to the claimant. If it happens to be the case that an element of one of those essential ingredients is misstated, misdescribed or omitted, it does not mean that a correct statement, description or inclusion is 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….

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.  …”

The causes of action in this case

13.  From the date of the Amended Defence and Counterclaim on 5 June 2015, it was clear that the Defendant’s pleaded causes of action were, and are, breach of contract, and negligence.  The pleaded case is one of breach of the Plaintiff’s contractual and common law duty, the alleged breach and alleged negligence being the Plaintiff’s failure to remove foreign objects on the external wall, failure to carry out the hammer tests properly, and consequently failure to rectify or repair the defective concrete and/or concrete cover of reinforcing bars in the external wall. 

14.  The proposed inclusion of paragraph (3A) of item 3 of Appendix B does not introduce any change to the Defendant’s cause of action, or its claim of the Plaintiff’s alleged negligence or breach of contractual duty: which remained the Plaintiff’s failure to carry out the necessary tests, failure to identify and remove the defective concrete, and failure to carry out the necessary repair work.  They stem from the facts of the Plaintiff carrying out the Works on the external walls, which include the hammer tapping tests conducted by the Plaintiff, its identification of the defective concrete or rusted reinforcing bars in the walls, and the manner of its execution of repair works on the external walls.  Paragraph (3) of item 3 of Appendix B does not plead or rely on any further fact or act of the Plaintiff - only the locations where the defects were found to exist.  It does, however, plead the fact that damage was substained by the Defendant as a result of the Plaintiff’s breach of duty.  Nor does paragraph (3A) seek to introduce any new act of the Plaintiff - it only seeks to refer to the existence of further defects in other locations of the external walls, which defects allegedly existed as a result of the defective works, negligence or failures of the Plaintiff.  As a result of paragraph (3A), the Defendant seeks additional costs or damage allegedly sustained as a result of the existence of additional defects, but they all stem from the same and original breach of duty of the Plaintiff, as already pleaded in paragraph 13 and item 3 of Appendix B.

15.  Accordingly, I do not accept that the proposed amendments to paragraph 13 and item 3 of Appendix B seek to introduce any new cause of action.

16.  Whether the Defendant can produce the evidence of the Plaintiff’s alleged breach and succeed on the merits of its claim are matters for trial: when the expert and factual evidence will be adduced, the witnesses cross-examined, the experts’ opinion tested, and the documentary evidence analysed, for the Court’s ultimate determination.  As the Court of Appeal held in Natamon Protpakorn v Citibank NA [2009] 1 HKLRD 455, leave is readily granted to amend before trial unless it can be demonstrated that the new claim based on the proposed amendment was bound to fail, but the Court should only have regard to the merits when they are readily apparent, and are so apparent as not to require prolonged investigation. 

17.  The Plaintiff emphasized that it is only the “estimate” of the Defendant’s expert (as recorded in his report) that the total number of hollow/debonded concrete surface on the external walls was around 3000, and that this was merely based on hammer tapping test being carried out on 5% of the total area of the external walls.  No doubt the expert would be cross-examined as to the basis of his estimate, and whether it can be accepted as reliable by the Court, but this is a matter for trial, and without the benefit of hearing the expert’s explanation for his estimate and the bases for his projection, it cannot be said at this stage that the Defendant’s case is bound to fail - as the Plaintiff submits.

The plea of the Renovating Clause

18.  On the behalf of the Plaintiff, Counsel argued that it is unnecessary for the Defendant to amend the Defence or Appendix B to plead clauses 3.1 and 4.4 of the Renovating Clause.  I do not agree, since the Renovating Clause refers to the scope of the Plaintiff’s works in the course of cleaning the external wall and dealing with the surface of the wall, including the removal of foreign objects and the removal of nails in the course of dismantling the scaffolding.  Whether the scope is indeed wider than the works set out in the Removing Clause is for argument and submissions at trial.

19.  As highlighted in the earlier parts of this Decision, the addition of further particulars or instances in a pleading does not amount to the assertion of a new cause of action.  The Defendant’s cause of action remains to be the Plaintiff’s alleged breach of the Renovation Agreement, based on the same facts of the Plaintiff’s manner of or omissions in its execution of the Works.  As the Defendant has emphasized, its pleaded case has at all material times been, simply, that the Plaintiff failed to remove foreign objects from the external walls of the Buildings, without making any distinction as to whether these objects had existed before the Plaintiff commenced the Works, or if they were left behind by the Plaintiff from its execution of the Works.  There is no new case of foreign objects being left behind from the Plaintiff’s scaffolding works.

Same facts

20.  If I should be wrong in my conclusion that there are no new causes of action relied upon by the Defendant by virtue of the amendments, any new claims or causes of action arising from the proposed amendments to items 1 and 3 of Appendix B clearly arise out of the same or substantially the same facts: regarding the Plaintiff’s execution and omissions in the execution of the Works under the Renovation Agreement. 

21.  In any event, as the Defendant highlighted, the Plaintiff has already prepared and presented its evidence to meet the claim of alleged breach of the Renovating Clause, by asserting in the witness statement already filed on its behalf that the Plaintiff had already removed the scaffolding nails from the external walls, and that (on the Plaintiff’s case) the scope of the Renovation Agreement does not include the removal of pre-existing nails on the external walls which did not require repair.  The trial of this action is set down for February 2019, and I cannot see how the Plaintiff is prejudiced in its preparation for trial as a result of the amendment to item 1 of Appendix B.

Orders

22.  For all the above reasons, the Defendant’s application for amendment is allowed, and I make an order in terms of paragraphs 1 - 3 of the Amended Summons of 12 May 2017.  The Defendant is to pay to the Plaintiff the costs of and occasioned by the re-amendments to the Amended Defence and Counterclaim.  The Plaintiff which has failed in its opposition to the application for amendment is to pay to the Defendant the costs of and occasioned by the hearing on 28 May 2018, with certificate for counsel.