TAIBAO INVESTMENT AND MANAGEMENT (HONG KONG) COMPANY LTD v. KARY ENTERPRISES (HOLDINGS) LTD AND ANOTHER

HCMP 3445/2013

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF APPEAL

MISCELLANEOUS PROCEEDINGS NO. 3445 OF 2013

(ON AN INTENDED APPEAL FROM HCA NO. 642 OF 2011)

________________________

________________________

________________________

________________________

Hon Cheung JA (giving Decision of the Court) :

1. The defendants applied to strike out the plaintiff’s claim on the ground that it was lodged outside the six-year limitation period and was therefore time barred. Master Kwong who heard the application allowed the plaintiff to amend its claim to plead acknowledgment of the claim by the defendants instead of striking out the claim.

2. On the defendants’ appeal (the 2^nd defendant’s appeal being out of time), Chung J allowed their appeal and disallowed the amendment. Chung J refused to grant the plaintiff leave to appeal.  The plaintiff now renews the application before this Court.

The three matters

3. The matters relied upon by the plaintiff as acknowledgment by the defendants of the plaintiff’s claim are :

1)    Two documents both dated 29 December 2010.  The first was a letter addressed by the 1^st defendant to the People’s Court, Sanshui District, Faoshan City.  The second was a notice of shareholders’ meeting.  In these letters the 1^st defendant proposed to transfer shares to the plaintiff.  Copies of the documents were sent to the plaintiff.

2)    A letter from the defendants’ former solicitor dated 24 June 2011 where it was said to contain an admission of liability to repay the plaintiff.

3)    Paragraph 23 of the defence filed by the defendants before their separate representation.

The two documents

4.1 In respect of the two documents, the Judge held that they were about :

‘ 11. ….

(1)  the claims lodged with the Mainland court for wage arrears, construction expenses and tax payments;

(2)  the Mainland judgment creditors’ application to enforce the judgment; and

(3)  D1 asking for the Mainland court’s indulgence to allow time for it to call for a general meeting to deal with the judgment debts.’

4.2 Whilst the Judge accepted that connected documents can be looked at to ascertain the true meaning of these two documents, he held that,

‘ 13. However, the plaintiff has not specified what the “connected” document(s) is/are, or how it/they can be said to be “connected” to the above documents. “Connection” cannot be without limit. Here, the only “connection” contended for seems to be that the parties involved were the same, and that the dispute in the Mainland proceeding arose out of a golf course which is also a matter related to the Collateral Loan Agreement. But that kind of “connection” is insufficient.’

4.3 The plaintiff contended that the Judge addressed this issue prematurely when discovery had not even begun.  We disagree.  It is not the Court’s practice, especially after the Civil Justice Reform, to allow a party to amend its case on the basis that something may turn up in discovery to sustain the new plea. 

4.4 In his decision on refusing leave, the Judge also said in respect of the two documents,

‘ 13. …. the reference to transfers of shares could only mean they were an attempt to obtain fresh funds for paying the judgment sum(s) (rather than a reference to transfers of shares to comply with the terms of an existing loan agreement).’

4.5 It is not necessary for the Judge to rely on this as he had already given his decision with reasons.  In any event, the plaintiff’s response to the Judge’s view, namely, the content of the two documents acknowledged the debt on the basis that it had acknowledged that the plaintiff ‘would be a shareholder’ is so contorted that it does not even begin to show a case of acknowledgment. 

4.6 In our view the Judge was correct to reject the two letters as an acknowledgment.

The solicitor’s letter

5.1 In respect of the solicitors’ letter of 24 June 2011, the Judge held that,

‘ 20. Even assuming the said letter does constitute an acknowledgement within the meaning of s 23(3), Cap 347, it is trite law a cause of action must be complete at the time of commencement of action: see, for example, Banque Worms v The Owners of the Ship or Vessel “Maule” (Cyprus Flag) (formerly known as “Amer Deep”) CACV 187/1994 (24 February 1995), para 25 and 45.

21. It follows that, because the said letter did not come into existence until after the commencement of this action, it cannot be relied upon herein as an acknowledgement for the purpose of s 23(3), Cap 347.

22. It may well be that the said letter can be so relied upon in a fresh action, but that is not a matter for consideration in the context of this action.’

5.2 We agree.

The Defence

6.1 In respect of paragraph 23 of the Defence it was plead that :

‘ The 1^st and 2^nd Defendants were arranging to repay the RMB 8,000,000.00 principal to the Plaintiff with 10 % interest as per the Collateral Loan Agreement” (emphasis supplied) (para 23 thereof).’

6.2 The Judge held that the same reasoning applies to this plea.  We agree.

The 2^nd defendant

7.1 So far the discussion is in respect of the position of the 1^st defendant.  The plaintiff’s case against the 2^nd defendant is even less arguable because section 23(3) of the Limitation Ordinance (Cap. 347) deals with acknowledgment in claims on ‘debt or liquidated pecuniary claim’ or claim to a deceased’s estate.  The Judge held that :

‘ 26. Further, because D2’s contractual obligation under the Collateral Loan Agreement was not to repay the debt, but to transfer the security asset to the plaintiff, the plaintiff’s claim for a monetary sum against him must be a claim for damages, rather than a claim for a debt or other liquidated pecuniary claims.’

7.2 We agree.

Conclusion

8.1 The plaintiff simply fails to show that its appeal has any reasonable prospect of success.  Accordingly the application is refused with costs to the defendants to be taxed if not agreed. 

8.2 The application is totally without merit and, pursuant to Order 59, rule 2A(8), we order that the plaintiff is not entitled to apply for an oral hearing to reconsider this application.