TANG KAM WAH AND OTHERS v. TANG MING YAT AND ANOTHER

HCA 10141/1998

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

ACTION NO. 10141 OF 1998

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R U L I N G

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1. This action came before me for trial on 14 September 2000. On the fourth day of the trial, the Defendants applied to re-amend the Amended Defence and Counterclaim. The application was dismissed. The Defendants then applied to adjourn the trial pending appeal against the refusal to amend. The application was also refused. I now reduce the reasons for refusing the 2 applications into writing.

Background

2. In this action, the Plaintiffs claim against the Defendants in trespass in land. The land in question belongs to Tang Mung Lau Tso and Tang Tsz Hau Tso. The Plaintiffs bring this action as managers of the 2 Tsos. The Defendants dispute the claim on the basis that there is a binding tenancy agreement between the Plaintiffs and the 1st Defendant in respect of the land and the 2nd Defendant is a lawful sub-tenant of the 1st Defendant.

3. The primary issue in this action is therefore the validity of the tenancy agreement. The Plaintiffs' case is that the agreement is not binding as a result of failure to comply with section 15 of the New Territories Ordinance, Cap.97. In particular, the Plaintiffs contend that the tenancy agreement did not have the consent of all the managers and also of the Secretary of Home Affairs or the District Officer. The Defendants' case is that the tenancy was agreed and approved at a meeting attended by the members of the Tsos and that the consent of the District Officer was not required. Paragraph 8(e) of the Amended Defence pleads that the tenancy agreement was signed by Tang Ka Hi, who is the manager of both Tsos, and by Tang Siu Cheung, who is the manager of Tang Tsz Hau Tso. Paragraph 8(g) went on to plead as follows:

"It is the customary rule that a manager of Tang Mung Lau Tso has the authority to act for and on behalf of it to lease out its land property, and that a manager of Tang Tsz Hau Tso has the authority to act for and on behalf of it to lease out its land property."

The combined effect of paragraphs 8(e) and (g) is that the tenancy agreement, having been signed by the manager of each of the 2 Tsos, is valid and binding in accordance with the customary rule.

Application to Re-amend Defence and Counterclaim

4. As far as pleadings are concerned, the Defendants' position has all along been as stated above and remained so when the trial commenced. On the fourth day of the trial and after the Plaintiffs had closed case, the Defendants applied to amend paragraph 8(g) as follows:-

"It is the customary rule that a manager of Tang Mung Lau Tso authorized or directed by a resolution of members passed at a duly convened meeting of members of the Tso has the authority to act for and on behalf of it to lease out its land property, and that a manager of Tang Tsz Hau Tso authorized or directed by a resolution of members passed at a duly convened meeting of members of the Tso has the authority to act for and on behalf of it to lease out its land property."

(The underlined parts signify the proposed amendment.)

5. The Defendants argued that the amendment was necessary to properly reflect their case, namely, that the tenancy agreement is binding because it was agreed at a duly convened meeting of the Tso members. The Defendants said that this has always been their case, as is apparent from the affirmations filed in opposition to the O.14 application and from the witness statements, and that the amendment was only to correct an accidental slip in the pleading.

6. The Plaintiffs understandably opposed the application. The principal objection is that the amendment involves pleading a completely new cause of defence that will necessitate new evidence and, possibly, expert evidence on the alleged customary rule. The Plaintiffs said they were taken by surprise and there is severe prejudice to them.

7. There can be no doubt that the proposed amendment is late and raises a new matter. It is in effect seeking to plead a new customary rule. There is, however, no suggestion that bad faith is involved. The fundamental concern is therefore the question of prejudice to the Plaintiffs and whether such prejudice can be overcome. There is plainly prejudice over and above the usual prejudice expected of a late amendment. An analysis of the proposed amendment will show that it raises a number of new evidential matters ranging from what constitutes a valid resolution of members to what amounts to a duly convened meeting of the members of the Tso. These are matters which the Plaintiffs do not have to deal with either on their own case or on the Defendants' case as it stands. With the proposed amendment, not only will the Plaintiffs have to consider adducing evidence on these new matters, but the Plaintiffs will also have to tackle these aspects when the defence witnesses come to give evidence. It is also not a remote possibility that some form of expert evidence or witnesses other than those initially scheduled may have to be considered.

8. The application to amend came at a time when the Plaintiffs had closed their case. It is true that the Plaintiffs could have re-opened their case and sought an adjournment to deal with these new matters. However, the prejudice outlined above may or may not be overcome in that it remains uncertain as to the prospect and outcome of obtaining the necessary fresh evidence.

9. Mr Chain for the Defendants observed that the Court should not shut its eyes to the obvious in that the Defendants had both in the O.14 proceedings and in the witness statements made reference to the custom and practice that matters agreed at a duly convened members' meeting are binding on the Tso. Mr Chain also submitted that the Court does not exist to discipline parties for oversight and slips. I accept entirely that the primary concern of the Court is to adjudicate on the merits of the case, but it must not be forgotten that procedural justice is as important as substantive justice. It has an important role to play to ensure that the parties have a fair trial and the results are just. It may be apparent since 1998 when the O.14 proceedings were launched that the Defendants alleged that matters agreed at a duly convened members' meeting are binding on the Tso, but the fact remains that the Amended Defence has pleaded a different customary rule. It must also be noted that the Amended Defence was drafted by counsel and filed in September 1998, at about the same time as the O.14 application. The Plaintiffs cannot be expected to assume that the Defendants' case is not as pleaded but is as stated in the affirmations or the subsequent witness statements. As a matter of fact, the witness statements only contain cursory reference to the custom and practice on the effect of a duly convened meeting. For my part, I can see that there is room for argument as to whether the custom stated in the Defendants' affirmations and witness statements and the customary rule stated in the proposed amendment are effectively the same.

10. In all the circumstances of the case, I do not regard that the interest of justice and the fair administration of justice demands that leave to amend, which is discretionary in nature, ought to be given. I therefore refused the Defendants' application to re-amend the Defence and Counterclaim.

Application for Adjournment Pending Appeal

11. Upon leave to re-amend being refused, the Defendants applied for an adjournment of the trial to enable them to appeal against the refusal of leave. The principal ground relied upon by the Defendants is that the proposed appeal has a decisive impact on their case in that the refusal of leave effectively means that they have no case to present. The Plaintiffs opposed the adjournment and pointed out that it would cause tremendous inconvenience and prejudice to the Plaintiffs in that they would be kept out of the use of land and that the Planning Department has issued enforcement notice regarding the activities carried out by the 2nd Defendant on the land.

12. It is trite and counsel accept that it is an unusual course to adjourn a trial halfway to enable an interlocutory appeal be brought. This should only be done in very exceptional circumstances. Para. 20/8/13 of The Supreme Court Practice 1999 vol. 1 states:

"In exceptional circumstances, especially when the trial or hearing is likely to be lengthy and an application for amendment is made to the trial judge which is substantial or crucial and which, whether granted or refused, will or may affect the final outcome of the action or is likely to be decisive after litigation, the trial judge may adopt the following course: to rule on the application and give the parties leave to appeal, and then adjourn the trial or hearing before him to enable the parties to appeal with due expedition to the Court of Appeal who may in their discretion hear the appeal speedily, and thereafter the parties will return before the trial Judge to resume the trial or hearing in the light of the decision of the Court of Appeal on the proposed amendment.

It is highly undesirable that there should be appeals to the Court of Appeal in the course of trials of action. It is altogether better that matters by an interlocutory nature should work themselves out in the course of the trial without interlocutory recourse to the Court of Appeal before the facts have been completely determined and the trial has been concluded. The Civil Division of the Court of Appeal may hear appeals in the course of the trial but only in exceptional circumstances. The reason is not just that it interrupts the trial, although this is usually a sufficient reason, but that if it became the practice to give leave to appeal in the course of a trial, the Court of Appeal will soon be overwhelmed with appeals, many of which might prove academic (McGarry (E.) Electrical v. Burroughs Machines, April 14 1986 CA Transcript No. 346)."

13. I do not regard this case as falling within the very exceptional circumstances. It was submitted that the refusal of leave has deprived the Defendants of the only available defence. I do not consider that it is a proper exercise of discretion to adjourn this trial so that the Defendants may be afforded an opportunity to salvage their case in the hope that the proposed interlocutory appeal may be successful. This is different from a situation where the granting or refusal of amendment may have an impact upon the conduct of the parties' case or the conduct of the proceedings, which is what is contemplated by the above passages in The Supreme Court Practice. The Plaintiffs cannot be kept in waiting indefinitely. The uncertainty as to the prospect of the action coming to a resolution is a very real form of prejudice, especially when these Plaintiffs are litigating in their capacity as managers of the Tsos.

14. I do, however, agree that the prejudice in terms of loss of use or income and the risk of enforcement action by the government is of relatively minor importance in this case, given the evidence of the Plaintiff witnesses that they have no intention to let out the land because of the restriction in user, and that the warning notices previously issued by the government do not appear to be related to the activities of the 2nd Defendant.

15. Mr Chain in the course of the application for adjournment drew my attention to the possibility of the Defendants' solicitors withdrawing from the case due to conflict of interest, following the refusal of leave to amend. Mr Chain had not gone into the details and I do not consider it prudent for me to enquire. This is a matter that should bear no weight in considering the application for adjournment. Indeed, Mr Chain rightly accepted so. He mentioned the point merely to bring it to the Court's attention.

16. Miss Eu SC, submitted that the Defendants had not demonstrated that the refusal of leave is plainly wrong as to show there is good prospect of a successful appeal. For my part, I consider that the prospect of success of the proposed appeal has minimal role to play in the weighing exercise. It would have been different had the ruling involves controversial or arguable points of law, which is not the case here.

17. For the reasons indicated above, the Defendants' application to adjourn the trial to enable them to appeal against the refusal of leave to amend is also refused.