XCHRX Wong Kam Hong t/a Continental Knitting Factory v. Triangle Motors Ltd.

1995, No.A7781

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

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J U D G M E N T

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The applications

1. There are two applications before me. The first is an appeal by the Defendant against Mr Registrar Betts' order allowing the Plaintiff's application to re-amend the Amended Writ and amend the Statement of Claim. The second is an application by the Plaintiff for leave to appeal out of time against the order of Master Chu dismissing the Plaintiff's application to re-amend the Amended Writ and amend the Statement of Claim.

The events

2. The events leading to these two applications are these. On 3rd September 1997, the Plaintiff ("Wong") issued a summons (the "1st Summons") seeking leave to re-amend the Amended Writ and amend the Statement of Claim. The amendment of the Writ was to substitute Great Bright Limited in place of Wong as the Plaintiff. The proposed amendment of the Statement of Claim stated that Wong was the agent for Great Bright Limited and had entered into the transactions with the Defendant. The margin notes of the summons referred to O.15, r.6 and O.20, r.5 of the Rules of the High Court. On 15th September 1997, on the hearing of the 1st Summons, the Master dismissed it on the basis that there was no supporting affidavit as required by O.15, r.6(3). The Plaintiff then on 10th November 1997 issued an identical summons (the "2nd Summons") and on 17th November 1997 the Registrar granted the order which is now being appealed by the Defendant. On 26th February 1998 the Plaintiff issued the summons seeking leave to appeal against the order of the Master out of time.

Appeal against the Registrar's order

Appeal vs a fresh summons

3. The only ground of appeal raised by the Defendant against the Registrar's order is that there was no jurisdiction to make the order when the Master had already dismissed an earlier identical summons. The Defendant relied on Sanyo Electric Trading Co. Ltd. v. Leung Kwok Hing [1993] 1 HKLR 253 in which Keith J. held that a party was not entitled to issue another summons when a previous summons on an identical subject matter had been refused and notwithstanding that the refusal was not based on a consideration of the merits. The authorities relied upon by Keith J. were first, Halsbury's Laws of England, Vol.26, 4th Edn., para.556 in which it was stated that-

"As a general rule, except by way of appeal, no court, judge or master has power to rehear, review, alter or vary any judgment or order after it has been entered either in an application in the original action or matter or in a fresh action brought to review the judgment or order. The object of the rule is to bring litigation to finality."

Second, the principle in Yat Tung Investment Co. Ltd. v. Dao Heng Bank Ltd. [1975] AC 581 was relied upon. Lord Kilbrandon at p.590A stated that -

"..... it becomes an abuse of process to raise in subsequent proceedings matters which could and therefore should have been litigated in earlier proceedings."

In Tong Yi Sang & Anr. v. Fung Law and Ng & Anr. [1993] 2 HKC 665 the master dismissed a summons for lack of an affidavit in support. The party issued a fresh summons seeking the same relief as in the previous summons. Kaplan J. commented that the party should have appealed against that order.

Other decisions

4. Mr Lau, Counsel for the Plaintiff, submitted that the Plaintiff was entitled to issue a fresh summons on the same subject matter if the 1st Summons was dismissed on procedural defects and not on merits. He referred to Note 14/1/6 of the Supreme Court Practice 1997 in which it is stated that "it has now been held by the Court of Appeal that although there is no provision for a second application after unconditional leave has been granted (although) it may be justifiable where the first was defeated by some technical objection not involving adjudication on the merits." Also a second application may be made in contempt proceedings after the earlier application has been defeated by a technical objection not involving adjudication on the merits : Jelson (Estates) Limited v. Harvey [1983] 1 WLR 1401. In Jelson, the plaintiff issued contempt proceedings against the defendant for breach of a court order. The notice of motion failed to specify the breaches complained of as required by the rules. The judge made no order on the motion. The plaintiff then issued a second notice complying with the rules. Goulding J. rejected the defendant's preliminary objection that the court should not entertain a second motion founded on the same contempt. Referring to the principle in Yat Tung Investment Co. Ltd., Goulding J. held that -

"... Where there is a litigation of a certain question or issue before the court resulting in a final or substantial order which decides it, then it is well established that it is too late (save in exceptional cases) for a party to adduce in subsequent litigation against the same opponent, or one privy to him, a fact that might well have been brought forward on the previous occasion. That doctrine, however, does not apply where there is a mere procedural defect and the court has never gone into the merits, though both parties were before it."

On appeal, the Court of Appeal did not disturb this part of the judgment.

Proper procedure is to appeal

5. This is an area in which there should be uniformity in practice. The approach taken by Keith J. is one that I would adopt. Where a summons is dismissed whether on procedural grounds or on merits, a dissatisfied party should appeal against that decision and not to issue a fresh summons on the same subject matter. There is no provision allowing such a step to be taken. The exceptions recognised in O.14 applications and contempt of court proceedings should not be further extended. Subject to the jurisdiction to rehear before the order is perfected which I will deal with later, once a decision has been made, the challenge is by way of appeal which operates as a re-hearing. I accept Mr Lau's explanation that in this case the 2nd Summons was taken out in an attempt to save cost. However, there is even a less expensive way of challenging the decision which seemed to have been overlooked. The Court has jurisdiction to reconsider and rehear the matter before the order is perfected : In re Harrison's Settlement [1955] 1 Ch 260 and Note 32/1-6/21 of the Supreme Court Practice. In this case, the order of the Master was only sealed and filed on 22nd November 1997. Had the Plaintiff wished to return to the Master to re-argue the matter, there was really nothing to stop him. The jurisdiction to rehear the summons before an order is perfected, however, should not be extended to a fresh application before another judge or master because this is not something contemplated by this jurisdiction. Mr Lau posed the question of what would happen if the original judge who heard the application had unfortunately passed away. That is a hypothetical question and it only needs to be considered when the situation arises. As the matter now stands, I reluctantly come to the conclusion that the Registrar has no jurisdiction to hear the 2nd Summons on 17th November 1997. I will allow the Defendant's appeal against that decision and set aside the order on the amendment.

Leave to appeal against the Master's decision out of time

Factors to be considered

6. The matters to be considered in deciding whether the discretion to extend time should be made are (1) the length of the delay, (2) the reason for the delay, (3) the chances of the appeal being successful if the application is granted and (4) the degree of prejudice to the defendant : Norwich and Peterborough Building Society v. Steed [1991] 2 All ER 880.

The delay and the reasons

7. The length of delay in this case is over five months. The Plaintiff's solicitor explained why the application for extension of time was only taken out on 26th February 1998. After the Master dismissed the 1st Summons, the Plaintiff's solicitor sought Counsel's advice on the dismissal. Two suggestions were made by Counsel. First, to appeal against the Master's decision on the ground that she was wrong in requiring a supporting affidavit. Second, to issue a fresh summons and to file the supporting affidavit, regardless of whether or not the rules imposed such a requirement. The solicitor then wrote to the Defendant's solicitors setting out in detail why the affidavit was not necessary and sought their consent to an order allowing the amendment. The request was refused. The Plaintiff's solicitor then obtained further confirmation from Counsel that a fresh application could be made if the original application was defeated by a technical objection and not on merits. In order to save cost, the first suggestion by Counsel was adopted. Accordingly, the 2nd summons was issued and as the Registrar granted the order, no further steps were then taken. The Defendant then lodged the appeal which was adjourned for argument. On 23rd February 1998, Counsel advised the solicitor that he had come across the decision of Keith J. in another matter and in view of the uncertainty in this area of the law, Counsel advised an appeal against the Master's decision in order to safeguard the Plaintiff's position.

8. It is clear that the Plaintiff's intention throughout the history of litigation is to amend the Writ and Statement of Claim as originally sought in the 1st Summons. It is certainly not the case that the Plaintiff was prepared to accept the Master's decision and abandon the intended application, although in the light of the authorities, the Plaintiff's lawyers might have taken the wrong alternative. The Plaintiff should not be penalised by this. Although the application for extension of time is issued over five months after the Master's decision, I am satisfied that a reasonable explanation has been given for the delay.

Merits

9. The rule governing the Plaintiff's application to amend the Writ and Statement of Claim is O.20, r.5(1) which is as follows :

"(1) Subject to Order 15, rules 6, 7 and 8 and the following provisions of this rule, the Court may at any stage of the proceedings allow the plaintiff to amend his writ, or any party to amend his pleadings, on such terms as to costs or otherwise as may be just and in such manner (if any) as it may direct."

The general principle on amendment before the limitation period has expired is clearly set out in Note 20/5-8/6 of the Supreme Court Practice, namely all such amendments ought to be made "for the purpose of determining the real question in controversy between the parties to any proceedings or of correcting any defect or error in any proceedings (per Jenkins L.J. in G.L. Baker Ltd. v. Medway Building and Supplies Ltd. [1958] 1 WLR 1216.)"

10. Where the limitation period has expired, the situation is governed by O.20 r.5(2) which provides that :

"(2) Where an application to the Court for leave to make the amendment mentioned in paragraph (3), (4) or (5) is made after any relevant period of limitation current at the date of issue of the writ has expired, the Court may nevertheless grant such leave in the circumstances mentioned in that paragraph if it thinks it just to do so."

I will further set out rule 5(3), (4) and (5) :

"(3) An amendment to correct the name of a party may be allowed under paragraph (2) notwithstanding that it is alleged that the effect of the amendment will be to substitute a new party if the Court is satisfied that the mistake sought to be corrected was a genuine mistake and was not misleading or such as to cause any reasonable doubt as to the identity of the person intending to sue or, as the case may be, intended to be sued.

(4) An amendment to alter the capacity in which a party sues may be allowed under paragraph (2) if the new capacity is one which that party had at the date of the commencement of the proceedings or has since acquired.

(5) An amendment may be allowed under paragraph (2) notwithstanding that the effect of the amendment will be to add or substitute a new cause of action if the new cause of action arises out of the same facts or substantially the same facts as a cause of action in respect of which relief has already been claimed in the action by the party applying for leave to make the amendment."

11. Paragraph (3) deals with the amendment of a name of a party when the effect of which is to substitute a new party. Mr Chiu, Counsel for the Defendant, argued that paragraph (3) applies to all such applications irrespective of whether the limitation period has expired or not. He submitted that the amendment could only be made if the mistake sought to be corrected was a genuine mistake and was not misleading or such as to cause any reasonable doubt as to the identity of the person intending to sue. He argued that the Plaintiff has not satisfied the test.

12. In my view this is a misreading of the rules. The governing part of O.20 r.5 for an amendment of the Writ before the limitation period has expired is paragraph (1). It applies irrespective of the nature of the amendment. The test is whether it is just to allow the amendment. Paragraph (3) is not an independent or specific provision relating to amendments of the name of a party within the limitation period. Likewise, paragraph (4), which deals with an amendment of the capacity of a party, and paragraph (5), which deals with adding or substituting a new cause of action, are not independent provisions dealing specifically with these two types of amendment during the currency of the limitation period. Paragraph (3) deals specifically with the amendment after the limitation period and it has to be read in conjunction with paragraph (2). This is made abundantly clear by the words in paragraph (3), namely "An amendment to correct the name of a party may be allowed under paragraph (2)". Paragraph (2) deals specifically with amendment after the limitation period. There is no requirement that before the limitation has expired, amendment would only be allowed if and only if the Plaintiff satisfies the Court that the mistake is a genuine mistake and is not misleading or there is no reasonable doubt to the identity of the Plaintiff. The discussion by Evans L.J. in International Bulk Shipping and Services Ltd. vs Minerals and Metals Trading Corporation of India [1996] 1 All ER 1017 on the distinction between the identity of the person intending to sue and the name of the party in amendments of this kind is of no relevance because the case concerns with an application to amend after the limitation period had expired. Likewise, many of the cases referred to by Mr Chiu on how one should construe paragraph (3) are cases where the amendment was made after the limitation period had expired.

13. The principle to be applied in adding or substituting a plaintiff is as follows :

"Adding or substituting plaintiffs - The tendency of modern practice is to allow the amendment where the defendant can be safeguarded as to costs, and the addition or substitution is necessary to enable the question at issue to be determined. So a plaintiff or plaintiffs whose presence is necessary can always be added (Long v. Crossley (1879) 13 Ch.D. 388; Emden v. Carte (1881) 17 Ch.D. 169, p.768; Showell v. Winkup (1889) 60 L.T. 389; Pennington v. Cayley [1912] 2 Ch. 236). 'The question whether the new plaintiff has a cause of action or not will not be considered on the application to add him, the object of the Rule being, not that the party's case should be so framed as to succeed, but that it should be so framed that it can be adjudicated on whether in his favour or not' (per Fry J. in Long v. Crossley (1879) 13 Ch.D. 388, p.391)." : Note 15/6/2, Supreme Court Practice.

14. It is apparent from the proposed amendment that Wong was acting as an agent for Great Bright Limited. Although an agent who signed an agreement without any qualification is personally liable unless a contrary intention appears in the instrument, this does not preclude an unnamed principal to sue on the agreement (The Trans Continental Under All Writing Agency SRL vs Grand Union Insurance Co. Ltd. [1987] 2 Lloyd's Rep 409). The Plaintiff's solicitor explained that the mistake of the name of the Plaintiff was discovered when his solicitor was in the process of obtaining the detailed witness statement from him. Wong was the sole proprietor of Continental Knitting Factory and a director of Great Bright Ltd. Based on the information and applying the principle the amendments should be allowed so that the case of Great Bright Ltd. can be adjudicated.

No prejudice to the Defendant

15. It is clear that there is no prejudice to the Defendant if the extension of time is granted. The application is still made within the limitation period and if the Defendant wishes to pursue against Wong, it is not in any way barred from so doing. However, as pointed out by Re Adhiguna Meranti [1988] 1 HKLR 410, that although the existence of prejudice to a would-be respondent is a ground for refusing an extension of time, the absence of prejudice to a would-be respondent is not a ground for extending time. The distinction is between an appeal as opposed to first instance litigation.

Affidavit

16. The Master held that the O.15, r.6(3) had not been complied with. The provision is as follows :

"(3) An application by any person for an order under paragraph (2) adding him as a party must, except with the leave of the Court, be supported by an affidavit showing his interest in the matters in dispute in the cause or matter or, as the case may be, the question or issue to be determined as between him and any party to the cause or matter."

17. The provision envisaged a party applying to add himself as a party, in which case an affidavit must be required. However, this is not a case of Great Bright Ltd. applying to add himself as the Plaintiff in the proceedings. It is Wong's application to amend the Writ to correct the name of the Plaintiff. Although the effect of this application is for the substitution of a new party, there is no requirement for an affidavit. According to Note 15/6/14 of the Supreme Court Practice, it is only where the facts are in dispute that the application to add, substitute or strike out parties requires to be supported by an affidavit. The normal rule is that no affidavit is required on a summons to amend : Sweet & Maxwell's High Court Litigation Manual para.2-031.

Conclusion

18. Having considered all these matters, the discretion ought to be exercised in granting the extension of time to the Plaintiff. The parties agreed that if I grant the extension then the application can be treated as the hearing of the appeal as well. From what I have said, the Plaintiff's appeal against the Master's order must be allowed. I will set aside the order and allow the Plaintiff to re-amend the Amended Writ and amend the Statement of Claim accordingly.

Costs

19. The appropriate order for costs of the parties' respective application is that each party should bear its own cost, save that the costs of the consequential amendment be to the Defendant in any event. The costs order made by the Master is unchanged. The only change to the costs order of the Registrar is to delete the costs order on the amendment. I will further order that the service of the re-amended writ of summons and amended Statement of Claim on the Defendant be dispensed with and the Defendant is to file and serve an amended defence within 14 days.