THE WING ON BANK LTD. AND ANOTHER v. WAI MAN ESTATES LTD. AND ANOTHER

1986, No. A1118

IN THE SUPREME COURT OF HONG KONG

HIGH COURT

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J U D G M E N T

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1. This is an application by the plaintiffs for leave to re-amend the re-amended Statement of Claim. The latter has had a relatively involved history since it was first filed in February 1986. However, it is not necessary for me to recount that since it is set out in sufficient detail In the judgment of Rhind J. on 13th August 1986 in an appeal from Master Suttill's order on the plaintiff's application for summary judgment under Order 14, and in the judgment of Deputy Judge Rogers on 5th December 1988, upon the plaintiff's application for leave to re-amend the re-amended Statement of Claim.

2. Prima facie the amendments seem to be required "for the purpose of determining the real question in controversy between the parties" in terms of the well established guiding principle applicable (see the Supreme Court Practice 1988 p.350 para. 20/5-8/6). But Mr. Bernacchi Q.C. for the defendants opposes the plaintiff's application upon the following grounds, that the application is an abuse of process and that the proposed amendments frivolous and vexatious; that the proposed pleading would still not disclose a cause of action; and that the proposed pleading is so inconsistent that leave should not be granted.

3. It is necessary to begin by mentioning, but only in bare outline, since it is contained in the judgments referred to, that the plaintiff's original pleading was that the amounts claimed were due in contract, i.e. as a result of loans made by the plaintiffs to the defendants and in some instances, guarantees by the latter to repay. The latter denied they were really loans and contended that they were a ploy by Albert Kwok, the now deceased Vice Chairman, Director and General Manager of the plaintiff companies, to enable the Wing On Group of Companies to obtain credit contrary to the provisions of the Banking and the Deposit Taking Companies legislation, by cloaking the transactions as loans to the defendants, which it had been agreed would not be recovered. Such evidence as has been presented points to the arrangements or conspiracy being for the purpose of benefitting the plaintiffs and possibly the defendants rather than to injure the plaintiffs.

4. It is against that background that Rhind J. gave leave to defend. In December 1986, the 2nd defendant was charged with fraudulent conspiracy with Albert Kwok and convicted in March 1988. The convictions were quashed on appeal in October 1988.

5. The plaintiffs applied before Deputy Judge Rogers in November and December 1988 for leave to make amendments to allege fraudulent conspiracies. Deputy Judge Rogers refused leave without barring the plaintiffs from applying for leave to make such amendments, which he indicated required to be appropriately particularized in a manner consistent with allegations of fraud.

6. It is in pursuance of that indication that the plaintiffs now apply for leave to amend the Statement of Claim to plead conspiracy with a plethora of detail. The pleading objected to by the defendants, which is repeated in relation to each of the several loans, appears in the proposed para. 28A, which the parties accept as a sufficiently representative example, in the following terms :

"28A. On or about 6th February 1984, the 2nd Defendant and Albert Kwok (now deceased) wrongfully, unlawfully, fraudulently and in breach of the said duties owed by Albert Kwok to the 1st Plaintiff conspired with each other :-

(i) intentionally to deceive and/or defraud the 1st Plaintiff and/or

(ii) to commit an offence under the Banking Ordinance Cap. 155 (1983 Revision) then in force ("Cap. 155") and/or

(iii) to commit offences under the Theft Ordinance Cap. 210

in the manner particularised hereinafter. In so far as may be necessary, the 1st Plaintiff says that the aforesaid conspiracy was with the intent or predominant intent to injure the 1st Plaintiff."

7. Mr. Bernacchi submits that a civil claim of damages for conspiracy is founded upon and must be pleaded to allege "a sole and predominant intention to injure the plaintiff" (Lonrho Ltd. and Another v. Shell Petroleumn Co. Ltd.) [1982] AC 173; Metall und Rohstoff AG v. Donaldson Lufkin & Jenrette Inc and Another, the Times 2nd Feb. 1989), and that a sole or predominant intention on the part of the defendants to injure the plaintiffs is incapable of proof and without any solid basis whatsoever. It has been agreed by the parties that the submissions must be proved to the same standard required to strike out pleadings, i.e. that they are plain and obvious.

8. Mr. Bernacchi in fact took vile former point in the same way before Deputy Judge Rogers who rejected it, holding that Lord Diplock in Lonrho by clear implication had not formulated his statement of the law on civil conspiracy to embrace acts causing damage which were actionable if committed by one person alone. Deputy Judge Rogers pointed out that that was the conclusion that was reached by Gatehouse J. in Tale Rohstoff case. But Mr. Bernacchi submits that since Deputy Judge Rogers gave his judgment, Gatehouse J. has been overuled in the Court of Appeal. It is apparent from the report of the judgment of Gatehouse J. in Rohstoff [1988] 3 WLR 548, that the conspiracy there alleged was a conspiracy to defraud. While a decision of the Court of Appeal in England is not binding upon this Court, it is of high persuasive authority, and is generally followed. According to Mr. Richard Mills Owens Q.C. for the plaintiffs, the decision in Rohstoff is now being appealed to the House of Loads. Furthermore, he plausibly advanced the obvious agruments that arise from the illogicality of limiting what is actionable if done by one person, when it is done by two or more. Those considerations would not have escaped Slade, Stocker and Bingham LJJ in Rohstoff. It seem to me that on the plain words of Lord Diplock in Lonrho, if the civil tort of conspiracy is relied upon then the sole or predominant intention to injure the plaintiff must be alleged and proved. That that requirement is dispensed with when the act done in pursuance of the conspiracy is actionable ever if done by one person alone, seems to me to be no answer once the civil tort of conspiracy is authoritatively defined, as it appears to me to have been done. Nonetheless the position does not seem to me to be so clear as to be plain and obvious that the sole or predominant intention to injure is an essential ingredient of the tort of conspiracy.

9. The views of Gatehouse J. in Rohstoff, Goulding J. in Faccenda Chicken Ltd. (1984) 1CR 589; 602, and Deputy Judge Rogers (that a combination of persons resulting in damage is actionable if the acts done by the combination would be actionable if done by one person alone) cannot be dismissed out of hand as their reasons do not appear to have been addressed by the Court of Appeal in Rohstoff according to the possibly less than full Times report. I accordingly concur in the view of Deputy Judge Rovers that the matter should be properly ventilated.

10. However that may be, the intention to cause the plaintiff injury appears to me to have been adequately if not ideally pleaded in the words:

"In so far as may be necessary, the 1st Plaintiff says that the aforesaid conspiracy was with the intent or predominant intent to injure the 1st Plaintiff."

11. I therefore reject Mr. Bernacchi's submission that the proposed pleading fails to disclose a cause of action.

12. I turn then to his submission that a predominant intention to injure is incapable of proof and without any solid basis whatsoever. In making that submission, he relies first of all upon Dow Hager Lawrance v. Lord Norreys and Others [1890] 15 App. Cas. 210. That was a quite extraordinary case in which the judges both at first instance and on appeal understandably took the view that the faces alleged were a myth. Those facts moreover were totally different from the facts in the present case. I do not accept that the present case is incapable of proof in the same way. I find of more assistances than his reference to the case not having a solid basis capable of proof, the following passage in Lord Herschells judgment at p. 219. :

"It cannot be doubted that the Court has an inherent jurisdiction to dismiss an action which is an abuse of the process of the Court. It is a jurisdiction which ought to be very sparingly exercised, and only in very exceptional cases. I do not think its exercise would be justified merely because the story told in the pleading was highly improbable, and one which it was difficult to believe could be proved."

13. Mr. Bernacchi also relied upon Wenlock v. Moloney [1965]1 WLR 1238, in which the foregoing words of Lord Herschell were quoted and relied upon by Danckwerts L.J. at p. 1234E. Although Wenlock explains that affidavit evidence is admissible to establish that a case is frivolous or vexatious, as opposed to being in admissible to prove that no cause of action is disclosed, it is not of material assistance as I do not regard the affidavit evidence in this case as showing that there was no intention to cause injury. The obvious absence of evidence directed to establish such intention may well have resulted, for instance, from the legal necessity to prove a predominant intention to injure being discounted.

14. Finally Mr. Bernacchi refers to The Upjohn Co. v T Kerfoot & Co. Ltd. [1988] FSR 1 in which Whitford J. struck out the remaining part of a pleading in exercise of the inherent jurisdiction of the court, holding that "when one cones to consider the inherent jurisdiction, one is entitled to look at the evidence, and evidence chat has been put in". The evidence put in before Whitford J. was affidavit evidence. Accepting that view of the law, the case is of little assistance, being one of enforcement of patent, in which the grounds were admittedly purely speculative and the proceedings in the judge's view no more chan intimidatory.

15. As I have indicated, the evidence at this stage, such as it is, tends to point to the defendants intention to benefit themselves and the plaintiffs rather than to injure the plaintiffs. But it does not in my view make it plain and obvious that there was no intention to injure the plaintiffs, afortiori, that such an intention is wholly imaginary of a myth. The question of the credibility of the evidence is very much in point and is not a matter than that can be appropriately resolved upon affidavit evidence. Nor do I accept Mr. Bernacchi's submissions that the structure of the pleading is so flawed as to warrant striking out. Finally the inconsistencies in paras. 28A and 29 of the proposed pleading (and it is not necessary in my view to set out the text of the latter) are nut of a nature that in my view would warrant striking out.

16. There are two other miner points made by Mr. Bernacchi that I should mention before I leave the matter of the alleged conspiracy. First, Mr. Mills-Owens' submission before Deputy Judge Rogers (at p. 11 of the latter's judgment) that it was the predominant propose of the conspirators to benefit themselves. I do not accept that it binds the plaintiff by way of estoppel or otherwise. Second that the averment of fraud is sought to be introduced far to late. In the particular circumstances that confront me, I am not persuaded that that is so.

17. I proceed finally to Mr. Bernacchi's submissions on the plea of misrepresentation also sought to be introduced by the proposed amendments. The representation is alleged to be that the 2nd defendant was the true borrower and that he held himself as the person liable to repay the sum borrowed. Furthermore, the representation is alleged to have arisen out of the 2nd defendant countersigning a copy letter, by which the 1st plaintiff offered the relevant overdraft facility. It is contended by Mr. Bernacchi that that plea must be based upon the assumption that the Court finds that the 2nd defendant is not contractually liable to pay the plaintiffs; that that is what the defendants have pleaded and only if they succeed, will they defeat the claim in contract. Upon that basis, Mr. Bernacchi points to various inconsistencies in the plaintiff's proposed statement of claim. I do not propose to detail them as they appear to me to rest upon total acceptance of the defendant's version. I do not accept as a rational and reasonable conclusion the truth of the defendant's entire version of the matter as a necessary consequence of a failure of the plaintiffs' contractual claim. For that reason I reject Mr. Bernacchi submission that the plaintiff's averments of misrepresentation are incapable of proof and also an abuse of the process of the Court.

18. In the result, I am not persuaded that leave to make the proposed amendments should be refused. On the contrary, it seems to me that leave should be granted, not only upon the usual principles, but to enable the plaintiff to proceed upon averments that not only have not been shown to be defective, but which the defendant will yet be able to attack at the hearing of the action. I will now hear the parties as to the terms if any upon which leave should be granted, any directions sought and costs.