RAMON L. SIY AND ANOTHER v. BPI INTERNATIONAL FINANCE LTD AND OTHERS

IN THE SUPREME COURT OF HONG KONG

HIGH COURT

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JUDGMENT

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1. In July or August, 1979, at the Manila Peninsula Hotel, Mr. Cinco, said to be an officer of the 1st and the 2nd defendant companies, supplied the Plaintiffs with information of the development of a residential and resort complex on the Spanish Mediterranean coast near Gibraltar. I shall call it "Sotogrande". The complex was in the charge of Financiera Sotogrande S.A. The 4th Defendant's interest in Sotogrande was 95%. The Plaintiffs were allegedly misled into taking over 18% of Sotogrande for just under US$6.5 M. The 1st Defendant was the investment adviser of the Plaintiffs. It is claimed that the 2nd Defendant was also an investment adviser of both Plaintiffs.

2. The purchase of the 18% of Sotogrande was to be made through a Liberian company called Asean Capital Limited. I shall call it "Asean". Asean was owned by the 1st Plaintiff, the 2nd Plaintiff and one Mr. Dee in equal shares. Certain documentation was completed. In substance, there was signed a Stock Purchase Agreement with the 4th Defendant for the 18% payable by an initial US$1,296,720 and ten equal half yearly instalments of over US$½ M each. The 1st Defendant was to guarantee payment to the 4th Defendant under that Stock Purchase Agreement. The Plaintiffs and Mr. Dee were to sign personal guarantee in favour of the 1st Defendant. Asean was to pledge its shares to the 1st Defendant as security.

3. The Stock Purchase Agreement for the 18% was dated the 1st November 1979, but it was not signed by all until the 17th April 1980. In fact, on the 31st October 1979 i.e. before the date of the Stock Purchase Agreement, a US$1 M deposit was paid. As a matter of fact, two more payments were made in the month of November 1979. After the signing of the Stock. Purchase Agreement, four more amounts including some accrued interest were paid. These payments under the Stock Purchase Agreement amounted to over US$1.95 M.

4. Other documents were signed or executed to implement the deal for the 18% of Sotogrande.

5. In October 1980, Asean's 18% of Sotogrande was sold together with other percentages therein to a company called Baron Segunda Corporation. The agreement for sale is dated the 10th November 1980. I shall call it "Baron". The Plaintiffs and Mr. Dee were ultimately to be responsible for payments by Baron in respect of the 18% as guaranteed also by the 1st Defendant. Again various documents were signed or executed to implement this very involved further transaction.

6. Subsequently the 1st Plaintiff acquired Mr. Dee's third equity in Sotogrande by a Deed of Assignment dated the 2nd January 1981 for over US$650,000, being a third of all the payments made under the Stock Purchase Agreement.

7. After the sale to Baron, including Mr. Dee's equity the Plaintiffs were in effect out of pocket for some US$3.2 M in eight payments between the 24th November 1980 to 31st July 1983. There should Appear in the corporate records these eight payments from Baron to the Plaintiffs but retained by the 1st Defendant.

8. The Plaintiffs claim to have thus sustained specific loss to the extent of these two principal sums, namely over US$1.9 M under the Stock Purchase Agreement for the 18% (inclusive of the over US$650,000 paid for the acquisition of Mr. Dee's third share in January 1981) and over US$3.2 M  incurred after the sale to Baron.

9. This action is against all four defendants. The 3rd Defendant is sued in his own capacity. He is also said to have acted on behalf of the 4th Defendant at the material time and controlled both the 4th Defendant through his wife and the 2nd Defendant through the majority shareholdings in Mermac, Inc. and the Ayala Corporation. This brief account explains all four defendants' alleged participation. I shall return to the 3rd Defendant later.

10. The Plaintiffs' causes of action against the 1st and the 2nd Defendants can broadly be grouped under five heads : (1) alleged breaches of contract in their disputed capacity of investment advisers, (2) alleged negligence under that contract, (3) alleged negligence in terms of breaches of duty of care within the neighbourhood principle based on reasonable forseeability of the parties, (4) alleged innocent and/or fraudulent misrepresentations, and (5) alleged breaches of claimed fiduciary duty: It really matters not whether my analysis is deadly accurate and precise in this very involved litigation. What is important is that in addition to the claim on breaches of fiduciary duty, there are other claims in contract and tort and under the Misrepresentation Ordinance. In these various causes of action against the 1st and the 2nd Defendants, the Plaintiffs claim, as consequential relief, damages, indemnity, rescission of certain guarantee or indemnity documents, a general account after enquiry and an account by way of equitable compensation for breaches of fiduciary duty.

11. This action was commenced by a general endorsed writ on the 30th October 1985. No service was attempted on any of the four defendants in this Hong Kong action. One day after the institution of the Hong Kong action, on the 31st October 1985, the Plaintiffs issued a complaint in a New York court against defendants including the same four defendants in the Hong Kong action. Preparation was made, at one time, for filing an identical complaint in a San Francisco court. No proceedings have in fact been commenced in San Francisco, but in the same month of October 1985, a complaint was issued in a California court solely against the 3rd Defendnat in the Hong Kong action.

12. I should outline the steps that have been taken in the New York action :

13. On the 26th August 1986, the California action was dismissed by consent. The 3rd Defendant as defendant in the California action agreed to submit to the jurisdiction of the Hong Kong court waiving all his claim to any limitation defences before the 25th October 1985, some 5 days before the commencing of this Hong Kong action.

14. Coming back to the Hong Kong action, in early September 1986 the 3rd Defendant filed an acknowledgment of service, even prior to any formal service of the Hong Kong writ on him. The 1st Defendant in the Hong Kong action was served on the 26th September 1986. Nothing was done in respect to the 2nd Defendant. The writ expired after a year on the 30th October 1986 and only by an affirmation filed on the 1st November 1986, the Plaintiffs applied ex parte to extend the validity of the Hong Kong writ with a view to seeking leave to issue a concurrent writ for service out of jurisdiction on the 2nd Defendant. Apparently, without any consideration of the appropriate period for extension, a whole year was granted by a Master. By an affirmation filed on the 6th November 1986, an application was accordingly made to another blaster for the issuance of a concurrent writ and for service thereof on the 2nd Defendant out of jurisdiction. The same was granted.

15. By the instant summons, the 2nd Defendant seeks to set aside the Order for extending the validity of the writ and the Order granting leave to issue a concurrent writ and to serve the same on the 2nd Defendant out of jurisdiction.

16. As against the 2nd Defendant, it is claimed that the Ayala group is a close-knit family establishment, the Ayala Family Corporation with blurring of identities. This description was given by Mr. Javellana, the managing director of Ayala International (Hong Kong) Limited, and he also understood the 1st Defendant to be owned 75% by the 2nd Defendant with the remaining 25% by China Underwriters Life in Hong Kong, Mitsubishi Bank, Bank of Philippines Island and Wells Fargo. Therefore, the 2nd Defendant is said to have owned and controlled the 1st Defendant at that time. It is also claimed that the 3rd Defendant controlled the majority shareholdings in the 2nd Defendant through Mermac, Inc. and Ayala Corporation; hence the 3rd Defendant had control of the 2nd Defendant and through the 2nd Defendant, the 1st Defendant. The 3rd Defendant allegedly controlled and owned the 4th Defendant. The 1st Plaintiff in his deposition also claims to have been given to understand by Mr. Cinco that he was then dealing with the Ayala Corporation. As for the 2nd Plaintiff, his understanding was that "Ayala was Ayala". On this alleged intimacy, Mr. Tong, counsel for the Plaintiffs, leaned heavily for his contention that the 2nd Defendant has been effectively sued in New York and Hong Kong.

17. For the 2nd Defendant, Mr. Bunting was at pains to highlight instances in which no reference was or was sought to be made to the 2nd Defendant. In the letter before action from the 1st Plaintiff dated the 18th April 1985, the 2nd Defendant was not even an addressee. In the 1st Plaintiff's affidavit, sworn on behalf of both plaintiffs on the 2nd May 1986, in opposition to the 1st Defendant's attachment motion filed as a defendant in the New York action, only the 1st Defendant was alleged to be the investment adviser to whom he looked for investment advice. Mr. Chinco was there described as the officer of only the 1st Defendant. Only the 1st Defendant was accused of having violated his duties towards the Plaintiffs and the Plaintiffs "had no advisers other than (the 1st Defendant) and the attorneys retained by them". In the Plaintiffs' notice to produce in the New York action of the 31st July 1986, they felt the need for seeking discovery of documents for the relationship between the 1st and the 2nd Defendants. In the 1st Plaintiff's deposition for the California action taken on the 21st August 1986, it was admitted by the 1st Plaintiff that prior to the opening of an investment account with the 1st Defendant, he had received no investment advice from anyone associated with any company within the Ayala group. The Plaintiffs had an investment advice account with the 2nd Defendant. The Plaintiffs have never sought to make any capital of it, nor referred to it. This investment advice account was only disclosed by Mr. Moreno on behalf of the 2nd Defendant, According to Mr. Bunting, it merely dealt with securities. It was categorically stated in paragraph 6 of the Plaintiffs' draft complaint for the intended San Francisco proceedings that "by the fall of 1979, the Plaintiffs had come to rely solely on the advice and direction of (the 1st Defendant)". This assertion was similarly made in paragraph 5 of the Plaintiffs' complaint in the New York action. The Plaintiffs had been advised by the same legal advisers throughout.

18. If the 2nd Defendant had been involved, so argued Mr. Bunting, it would not have been overlooked in these aforesaid instances. It can be fairly maintained, I think, that if the Plaintiffs had been minded to claim against the 2nd Defendant, their intention was not made plain or obvious enough. Mr. Tong conceded that no such assertion was explicitly made in the New York action, but counsel proposed to remedy that in the Hong Kong action by an amendment. It must be recognized, however, that even in the complaint of the New York action, in paragraphs 3 and 6 in particular, the allegations are that these defendants and Ayala Corporation were all agents and servants inter se and that in 1979, the 1st and the 2nd Defendants acting on instructions and under the control of the 3rd Defendant, advised the Plaintiffs to purchase the 18% in Sotogrande. The allegations against the 2nd Defendant are as complex and wide-ranging as the very involved transactions relied upon. Despite these apparent omissions with reference to the 2nd Defendant, the Plaintiffs have, in my view, shown a good prima facie case against the 2nd Defendant in New York, and the Hong Kong claim should be assessed with the proposed amendments.

19. I will deal first with the Plaintiffs' application to extend the validity of the writ. Sufficient or good reason is evidently lacking in the Plaintiffs' making of such an application after the expiry of the initial 12-month period. The law is now that no special circumstances but only good or sufficient reason need be shown for invoking the power to extend the validity of a writ under O.6, r.8(2), R.S.C. See Kleinwort Bension Ltd. v. The Barbrak Ltd., otherwise known as "The Myrto".⁽¹⁾ At page 1069, letter B, Lord Brandon of Oakbrook sounded a warning note that in an application made after the year for extension of the validity of a writ involving questions of limitation defences, not only was an applicant obliged to provide good or sufficient reason for the extension sought but he would have "an extra difficulty to overcome, in that he must also give a satisfactory explanation for his failure to apply for extension before the validity of the writ expired". Mr. Bunting urged this Court to treat independently, as a freshhold question, the late application beyond the initial 12 months. Counsel submitted that as the dilatoriness was inexcusable, letting alone any good reason, the Court need go no further. I do not share Mr. Bunting's interpretation, if only on the reference made by Lord Brandon to "an extra difficulty" in the overall deliberation. Delay or out of time is just one of the obstacles to overcome in an endeavour to furnish good reason for extension. The learned Law Lord advised that all the circumstances of the case must be looked at, having regard also to the balance of hardship. The ultimate decision will invariably have to be left with the hearing judge as to whether matters taken together could properly constitute good reason. See pages 1069, letter A, 1069, letter C and 1070, letter B. The correct approach is, in my view, that good reason must be shown to justify the exercise of judicial discretion to extend bearing in mind all relevant and material considerations, including the lack of diligence in not making the application within the 12 months' period and the possible prejudice of shutting out the operation of any statute of limitation. That circumstances, together with balance of hardship, providing good reason for extending the validity of the writ are not also sufficient for excusing the late application beyond the 12 months' period must be rare. If indeed the delay beyond the one year was deliberate, it would be difficult to persuade the court that good reason exists even on account of grave imbalance of hardship.

20. In support of the Plaintiffs' application under O.6, r.8(2), solicitor disclosed on affidavit that he "was instructed by the Plaintiffs not to serve the writ on the Defendants, because legal proceedings were proceeding in other jurisdiction on behalf of the Plaintiffs against the same Defendants." It was also sought to explain thus "Certain of those proceedings are not being pursued following discussion between the parties and it is now thought desirable that this action should continue in Hong Kong." That is no explanation for the inaction. Moreover, it is misleading as the New York action is still being prosecuted. Counsel for the Plaintiffs has no instructions to offer putting an end to the New York proceedings at an appropriate time. It is common ground that there has been no discussion for any discontinuance or suspension of the New York action. Divers reasons were advanced but they are not or not satisfactory explanations for the delay, and delay beyond the original year. But the real question for my determination is whether ultimately good reason has been disclosed for extending the writ, on all the circumstances including all possible prejudices. I should turn now to the matters canvassed before me.

21. The Plaintiffs complain that they would be without remedy if the 2nd Defendant's challenge to the jurisdiction of the New York Court should succeed. In the Answer of, inter alia, the 1st and the 2nd Defendants in the New York action, the Third Defence is : "22. This action may not be maintained because the Plaintiffs lack the necessary standing to sue." The Fifth Defence is "24. The Court lacks jurisdiction of the person of each of the answering Defendants." I have not been explained the significance and true implications of these Defences except for the general statement that at least the Fifth Defence is a challenge to jurisdiction. No explanation was given as to the scope and extent of the consequences of these Defences in New York law. Countless steps have since been taken and I have not been assisted on the effect of these fresh and further trial preparations since the Answer dated the 11th April 1986. There is no concession on the part of the Plaintiffs that these are even substantial Defences.

22. It is said that the 1st Defendant as a Hong Kong company has been served with the Hong Kong writ within jurisdiction and that the 3rd Defendant has acknowledged service of the Hong Kong writ in his submission to jurisdiction pursuant to the California settlement. But it should be noted that the 1st Defendant and the 3rd Defendant are also parties in the New York action.

23. It is suggested that as the 2nd Defendant is being served as a necessary and proper party to the Hong Kong action against the 1st and the 3rd Defendants, if extension of the Hong Kong writ were refused, service out of jurisdiction on the 2nd Defendant might not be secured on the same ground in a new writ. In the first place, why is there a necessity for duplicating in Hong Kong the pending litigation in New York? Confining to this aspect, I have not been advised on the difficulties, if any, in obtaining leave to serve the 2nd Defendant out of jurisdiction in a separate Hong Kong action instituted against the 2nd Defendant alone with a view to consolidating it with this action. Some possible repercussions were outlined by counsel for a forced discontinuance of this action against the 3rd Defendant, but it does not seem to be problematic to issue a new writ against the 1st and the 2nd Defendants and apply again on the same ground under O.11 in respect to the 2nd Defendant.

24. It was commented in passing that the Hong Kong action might save costs. Hong Kong is geographically closer to Manila than New York, and some of the witness are here. That aside, it has not been explained to me why litigation in Hong Kong would be significantly less costly than that in New York, particularly when much preparation and time has been invested in the prosecution of the New York action. Moreover, it is not unknown that American proceedings may be put on a contingency fee basis. The Court has not had the benefit of any analysis as to why it was said that the attachment motion had absorbed a great proportion of the legal costs in New York. Some preliminaries may be taken advantage of, but I have not been given any or any realistic estimate.

25. It is also claimed that quality of evidence to be adduced has not deteriorated by the delay. That is true but principally due to the New York depositions.

26. The 2nd Defendant further complains that if the Plaintiffs were allowed time to make an application for extending the validity of the writ, it would lose the benefit of running its limitation defences. Counsel for the Plaintiffs did not accept that the 2nd Defendant has any serious defences in time bar. Mr. Tong strenuously pressed upon me that there is no room for any application of the Statutes of Limitation. Counsel classified the instant application as involving a writ having ceased to be valid but with all the relevant periods of limitation if applicable, still operative.

27. The consensus is that disputed questions of fact should not be resolved at this stage. It is basically more of a procedural rule than anything else. Lately it received some attention from Lord Justice Ackner in UBAF Limited v. European American Banking ⁽²⁾ Order 6 is concerned with "a right of defence" as it was well said by Lord Goddard in Battersby v. Anglo-American Oil Company Limited ⁽³⁾: "In every case, care should be taken to see that the renewal will not prejudice any right of defence then existing". Once a defendant can show that he will be deprived of "a reasonably arguable limitation defence", the application to extend will be saddled with another added difficulty. The real prejudice lies in the loss of an opportunity to raise a tenable argument. This lighter burden of merely having to establish the loss of a right of defence as a prejudice was conceded by counsel and accepted as a correct concession by Slade, L.J. in Wilkinson v. Ancliff (B.L.T.) Ltd.⁽⁴⁾ Later, at p.1362, letter B of the judgment, the learned Lord Justice emphasized that a defendant need not show "a cast-iron defence based on the Limitation Acts" Under O.6, r.8, when a prima facie limitation defence is in issue , the applicant for extension will have to provide a substantial reason. Sachs, L.J. observed in Jones v. Jones ⁽⁵⁾: "Where it is desired to deprive a defendant of his ability to plead a Statute of Limitations, naturally the good cause to be put forward must be strong." All these judicial sentiments were echoed in The Myrto. See p.p. 1063, letter E and 1065, letter E. It would seem, therefore, that the 2nd Defendant is required to show no more than a probable limitation defence and thereupon under O.6 r.8(2) the Plaintiffs must justify the risk of disturbing the exercise of such a right by strong good reason. "Concealment" or "discovery" are issues, if joined, to be determined also at the trial, but they could not affect the 2nd Defendant's right to limitation defences at this juncture.

28. Obviously, not just any fanciful allegation of a limitation defence can be taken into consideration. The 2nd Defendant must be able to show a real likelihood or substantial risk of prejudice by the extension. Counsel for the Plaintiffs referred me to certain passages in Tito v. Waddell⁽⁶⁾ which Megarry V.C., as he then was, discussed the nature of the ruel about fair-dealing as part of the duties and discretions of trustees, such as agents, solicitors and company directors. An investment adviser and his agents/servants msut fall within the same class. Relying on passages appearing at pages 249, letter E to 250, letter B and 251, letters E - F, Mr. Tong submitted that as a claim founded in alleged breaches of fiduciary duty, the 2nd Defendant as an investment adviser and/or agent of an investment adviser was in breach of the fair-dealing rule in equity and was not qualified for the benefit of any statutory limitation. Reference to this equitable doctrine was recently made in Carrian Investments Limited (In Liquidation) v. Wong Chong-Po ⁽⁷⁾. Mr. Tong contended that the Plaintiffs' claims against the 2nd Defendant could only be defeated by the equitable doctrine of pure laches. Counsel took his argument a step further and suggested that alleged breaches of the 2nd Defnendnat's fiduciary duty was of a continuing nature as analysed by Ackner, L.J. in UBAF Ltd. v. European American Banking ^(2a). A claim for an account on alleged breaches of fiduciary duty is "an equitable action for an account", "ancillary to the claim for equitable compensation" and, so concluded Mr. Tong, must be put on the same footing.

29. Mr. Tong's powerful submissions in equity were forcefully made, but they relate only to alleged breaches of fiduciary duty and an equitable action for an account arising from those breaches. There are other claims in the Hong Kong action in contract and tort as well as under the Misrepresentation Ordinance. There is also a claim for an ordinary order of account and enquiry together with a prayer for rescission of certain guarantee or indemnity documents. So long as these claims sound in contract or tort or are based on the provisions of the Misrepresentation Ordinance, they do not fall within the principles as propounded in Tito v. Waddell.⁽⁶⁾

30. It was further contended by Mr. Tong on behalf of the Plaintiffs that no causes of action had accrued either at the time of the alleged misrepresentations in July or August 1979, or at the time when the Plaintiffs parted or agreed to part with their US$1 M as a deposit for the purchase of the 18% of Sotogrande on the 31st October 1979 but that since every cause of action only arose when the alleged wrong brought about a loss, the accrual of the causes of action occurred between the US$1 M paid on the 31st October 1979 and the last known payment made by Baron but retained by the 1st Defendant on the 31st July 1983 Relying on the case of UBAF Limited,^(2b) Mr. Tong further submitted that it was not now necessary for the Plaintiffs to pinpoint the actual date of each accrual. Counsel's explanation was that as these controversial issues would have to be decided at the trial, the 2nd Defendant was unable to rely on them for its limitation defences before they were resolved at the hearing. It is evident that counsel was drawing no distinction between raising a probable limitation defence and establishing it. UBAF Limited v. European American Banking Corporation⁽²⁾ is a case on an O.11 application. In UBAF Limited, the action was commenced six years after the contractual agreement to lend but within six years of the borrowers' default. At the time of the application under O.11 for leave to issue a notice of writ for service out of jurisdiction and to serve the same out of jurisdiction, the application was more than six years after the lending contract but within six years of the default. In point of time, the O.11 application was no different from the writ. There was, therefore, no further complication such as what we have in the instant application that the O.6 and O.11 applications introduced a time element, viz. at the time of both applications, unlike the writ, the six years' period allegedly expired. On the other hand, the granting of leave in the UBAF case could not have advanced, postponed or in any way prejudiced the time bar position of the defendants. The computation for the six years' period remained constant either between the lending contract date and the date of the writ or the O.11 application OR the date of default in payment by the defendants and the date of the writ or the O.11 application. The granting of leave under O.11 in the UBAF case would not have shifted such computation. Be that as it may, the decision in the UBAF case simply adhered to the general principle. Obviously no factual determination could or should be made on that O.11 application; thus the plaintiff lending bank had an arguable case, that is to say, its cause of action had not been statute-barred; hence the O.11 leave should not have been refused.

31. Wilkinson v. Ancliff ^(4a) as qualified by the House of Lords' decision in The Myrto ⁽¹⁾is an O.6 extension of validity of writ case where a defendant need merely provide an arguable limitation defence to generate more obstacles in the path of a plaintiff/applicant seeking an extension.

32. Apart from the different facts and the absence of a further time element in the UBAF case, the principle applied seems to be consistently alike whenever a party relies on disputed facts, he may generally raise the issue as a prima facie claim or defence at an interlocutory stage - an arguable case of a subsisting cause of action unaffected by the Limitation Acts under O.11 as in the UBAF case and an arguable limitation defence under O.6 as in Wilkinson v. Ancliff.

33. The 2nd Defendant claims that the Plaintiffs' causes of action, of which none is admitted to have been founded on alleged breaches of fiduciary duty, accrued in 1979 and are thus liable to be defeated . by its limitation defences. It would be encumbent upon the Plaintiffs, if determined to expose these limitation defences as baseless or shadowy, to specify at least the dates of the accrual of causes of action other than those arising from alleged breaches of fiduciary duty. The Plaintiffs have declined so to do. If, in fact, there were no substance in the 2nd Defendant's alleged limitation defences, it would have been redundant for the Plaintiffs to secure from the 3rd Defendant in the California settlement a waiver of any time bar up to the 25th October 1985. The alleged misrepresentations are said to have been made in Jury of August 1979. Moreover, on the contended basis that cause or causes of action arose between the 31st October 1979, the US$1 M deposit and 31st July 1983, the last known payment by Baron to the Plaintiffs but retained by the 1st Defendant, if the Baron payments could gauge the accrual date or dates for computing the limitation period, then there would seem to be little justification for denying that at least from the sale to Baron of the Sotogrande interests including the Plaintiffs' 18% in October 1980, time had started to run. Both of the Plaintiffs' applications under O.6 and O.11 were made in November 1986, more than six years after the October 1980 sale to Baron.

34. Mr. Bunting submitted that the Plaintiffs are not in fact claiming to be entitled to damages to be measured by the difference in the value of their 18% of Sotogrande as compared with the value it would have had if the representations had been accurate, in the nature of a breach of warranty. If that were the contention of the Plaintiffs, so it was tested by Mr. Bunting, then the value of the Plaintiffs' Sotogrande investment together with the difference proposed to be so assessed could only be decided at the hearing. But Mr. Bunting disagreed with that interpretation and maintained that in fact the Plaintiffs' case is : if they had known the respects in which the representations were inaccurate, they would not have entered into the Stock Purchase Agreement at all. Accordingly, so Mr. Bunting submitted, at the very moment of entering into that Stock Purchase Agreement, the Plaintiffs must have then and there allegedly suffered damage. A similar contention was embraced by Leggatt J. in the UBAF case, see page 725, letters C - F. The instant case is plagued by more involvements and complexity. To me, the 2nd Defendant has raised good arguable defences in limitation.

35. Mr. Bunting, counsel for the 2nd Defendant, also called in aid the falsity of the information supplied to the Master in the O.6 application, and in addition the non-disclosure of the New York proceedings as lis alibi pendens to both Plasters in these two applications under O.6 and subsequently under O.11. The non-disclosure and the gross inaccuracies could have been avoided, though they were not the result of deliberate withholding of material information.

36. As long ago as Ellinger v. Guinness, Mahon & Co.⁽⁸⁾, new grounds were allowed on an application to set aside leave granted under O.11. At page 25, letter C, the unintentional non-disclosure was that the German courts were to have exclusive jurisdictions. That was manifestly afresh ground. In WEA Records Ltd. v. Visions Channel 4 Limited ⁽⁹⁾, Dunn, L.J. accepted stronger evidence after having rejected a submission that on a subsequent inter partes review of an ex parte Anton Piller order, "the Court should confine itself to the evidence before the judge who made the order." In the recent decisions of our Court of Appeal, the same approach was not departed from. See International Housing Development Limited v. Quek Teck-huat & Others ⁽¹⁰⁾ ; Mitsui & Co. Ltd. v. Fumara Maritime S.A.⁽¹¹⁾ I am. constrained to part company with Mr. Bunting on his contention that an applicant for leave under O.6 or O.11 is limited to putting flesh on the skeleton hitherto displayed ex parte but that no new grounds can be broached in a subsequent inter partes challenge.

37. In Ellinger v. Guinness, Mahon & Co., Morton, J. declined to set aside the ex parte order for leave under O.11, obtained on material non-disclosure but without any intention to deceive, on the ground that "the only result would be to put the applicant to the expense of making a further application under R.S.C., O.11, r.1, which would be bound to succeed." If I were to hold in favour of the Plaintiffs, I would consider myself so guided in not discharging these Orders under consideration.

38. I should, therefore, take into consideration all the relevant matters now placed before me. Whatever non-disclosure there was, it cannot be now truly relevant as there has been no irreversible prejudices and admittedly no deliberate intention to deceive. However, despite Mr. Tong's analysis, there existed before the Master material non-disclosures and false information, based upon which the Order under O.6 was made.

39. The Plaintiffs offered no satisfactory explanation for the delay in making the application under O.6. For the reasons I have given, the 2nd Defendant has good arguable limitation defences in a great variety of action, which would be defeated by an extension of the validity of the writ with a view to the Plaintiffs seeking leave under O.11. Aided by all the information now available, justification has still yet to be found for subjecting the 2nd Defendant to the oppressive double litigation in Hong Kong on essentially the same dispute It is not even suggested that the New York proceedings have been conducted without due diligence. There is no intimation of any imminent or proposed abandonment of the New York action. None has been offered." Too many substantial steps have been taken in New York for matters to be now thoughtlessly cast aside. Despite geographical proximity and reference to Philippino law, Hong Kong has not been demonstrated to be a better or more proper forum. The New York court has long acquired seisin of the dispute. It has not been established that legal costs is comparatively less exorbitant in Hong Kong or that legal process is comparatively more expeditious here. I am also not persuaded that there will be real hardship or difficulty in enforcing a New York judgment in Hong Kong against the 1st Defendant After all, an out of time application is, as Slade, L.J. observed, "a substantial indulgence". See Wilkinson v. Ancliff, ante. p, 1361, letter H. Extension was sought for the sole purpose of an intended O.11 application. If full and accurate disclosure had been made to the Master, he would have also considered the proposed O.11 application as an exercise in futility and refused extension. This claim has close connection with Hong Kong, but the ramifications of the involved and complex transactions are widely spread. The balance of hardship tips decidedly in favour of the 2nd Defendant.

40. In my judgment, for all these reasons, the Plaintiff has shown no good or sufficient reason for an extension. The application under O.6 should not be allowed to stand; nor should it be granted by this Court; hence the same must be set aside.

41. The O.11 application could only have been proceeded with in the instant case upon the earlier successful application under O.6. I was invited to consider the order made by another Master under O.11 independently, in effect, therefore, treating that subsequent application as if it had been made with an extended writ. That is unreal for I have myself refused extending the validity of the writ. I have therefore to assume my decision on the Master's Order made under O.6, r.8(2) to be wrong. On that assumption, it would be difficult to visualise how, on the same facts, the Master and I could possibly refuse the O.11 summons with any consistency, particularly when the application under O.6 was specifically made with a view to seeking leave for serving the 2nd Defendant out of jurisdiction. There are, at least, three more possibilities, but they need all be considered as if the writ had not been extended for the sole purpose of making an application under O.11. if the writ had been extended for the very intended O.11 summons the O.11 application could hardly be expected to be refused. On this last assumption, if I were to treat the writ for the O.11 summons either as if there had been no necessity for extending its validity or as if it had been, for some irrelevant reasons, properly extended, in both these two possibilities, the limitation defences of the 2nd Defendant would still remain a material consideration. The situation would then be one as in the Category (2) case in The Myrto, viz. "the application for extension is made at the time when the writ is still valid but the relevant period of limitation has expired." In that case, the 2nd Defendant would be similarly prejudiced in the loss of a good legal defence which it would otherwise possess as well as in the need to face another set of litigation in Hong Kong. Save for extension of the validity of the writ, I would have all the like considerations to take into account and would similarly reach a decision adverse to the Plaintiffs.

42. The least illogical approach to the invitation extended to me to consider the O.11 summons independently would be to ignore my decision on the O.6 summons altogether but to assume that somehow the writ had been properly extended with the limitation defences in mind. On the same previous assumption that the O.6 summons had not been issued with a view to filing an intended O.11 application, I would then be left with virtually only the question of double litigation. First and foremost, I am of the opinion that the Plaintiffs have a good arguable case. The non-disclosure and gross inaccuracies could have little bearing now that I have all the material. Farwell, L.J. reiterated a statement of Pearson, J. in Societe Generale de Paris v. Dreyfus Brothers⁽¹²⁾ that it is a serious matter to compel a foreigner to subject to alien jurisdiction and that if there should be residual doubt in any crucial factor on an O.11 application the same be resolved in favour of the foreigner. See The Hagen. ⁽¹³⁾ I entertain, however, no doubt. For all the reasons I have given, there seems to be no necessity for harassing the 2nd Defendant by double litigation in Hong Kong in terms of issues, progress, convenience, time, effort and costs. Bluntly put: I would not grant an O.11 application on double litigation alone. In the result, the Order granted under O.11 should likewise not be continues, and I myself would not accede to the Plaintiffs' application. The same should, therefore, also be set aside.

43. In my judgment, both Orders granted should be set aside with an Order Nisi for costs against the Plaintiffs in each case.

(1)    [1987] 2 W.L.R. 1053

(2)   [1984] 1 Q.B. 713 at p. 718, letter E

(3)   [1945] KB 23 at p.32

(4)   [1986] 1 W.L.R. 1352 at p. 1361, letters F - G

(5)   [1970] 2 QB 576 at p. 586, letter H

(2a) [1984] 1 Q.B. 713 at P. 728

(6)   [1977] 1 Ch. 106

(7)   [1986] H.K.L.R. 943 at p. 951

(2b) [1984] 1 Q.B. 713

(4)   [1986] 1 W.L.R. 1352

(8)   [1939] 4 A.E.R. 16

(9)   [1983] 1 W.L.R. 721 at p.728, letter H

(10)  [1986] H.K.L.R. 1153 at p.1162, letters E - G

(11)  Civil Appeal No. 96 of 1986, the judgment of which were delivered on the 20th January 1987

(12)  (1885) 29 Ch. D.239 at p. 242

(13)  [1908] p. 139 at 201