CHARLES KWAN SHIU CHEONG v. FERRARI S.P.A. AND ANOTHER

Headnote

Interlocutory appeal - amendment of pleadings - no new cause of action averred - judge had refused leave to plaintiff to amend.

Held (Court of Appeal) : judge erred in principle, negating his exercise of discretion.

Observations on the "doctrine" of res ipsa loquitur. "it is no more than an exotic, although convenient, phrase to describe what is in essence no more than a common-sense approach, not limited by technical rules, to the assessment of the effect of evidence ... " per Megaw LJ in Lloyde v. West Midlands Gas Board [1971]1 WLR 749 at 755 followed.

Observations on the need in interlocutory matters for expedition.

IN THE COURT OF APPEAL

1994, No. 120
(Civil)

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J U D G M E N T

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Nazareth, J.A.:

1. This is an appeal from the Order of Deputy Judge John Griffiths, Q.C., dated 3rd June 1994, refusing the plaintiff leave to amend his statement of claim.

2. The facts are as follows. On 6th October 1986 the plaintiff purchased for $620,000 a Ferrari car manufactured by the 1st defendant. The plaintiff was the second owner. The first owner had purchased it on 13th May 1986. On 14th October 1986, and again on 28th October 1986, it was serviced as it had been on earlier occasions by the 2nd defendant in its garage. On 5th November 1986, while the car was being driven along Waterloo Road in Kowloon, it caught fire and became a constructive total loss.

3. By his statement of claim, endorsed upon a writ dated 20th January 1988 ("the original pleading"), the plaintiff claimed damages in negligence from both the 1st and 2nd defendants. The particulars of negligence were stated in paragraph 6 in the following way:

"There was a leakage in the section of fuel feeding tube or joint between the fuel pump and the fuel injection unit. As a result of the leakage, petrol leaked onto and accumulated on a partition shielding (in the shape of a tray) which was below the fuel distributor and above the exhaust pipe. When the accumulated petrol overflowed from the shielding onto the hot exhaust pipe, the fire was started which destroyed the vehicle."

Further particulars were given in relation to the 2nd defendant's servant's or agent's negligence in the repair or servicing of the motor vehicle. I will not detail these here.

4. Those particulars came from the opinion of a Mr Shum Lau, a forensic expert from whom the plaintiff sought a report. It was followed by the 2nd defendant also obtaining expert advice from a Mr Whittle and thereafter in its Defence putting the plaintiff to proof without pleading any positive case as to the cause of the fire. Thereafter both sides obtained further expert evidence. One of these experts, Mr Leung Tin-yau, was commissioned by the plaintiff and gave a report dated 12th October 1993. While his opinion was similarly that the fire was caused by leakage from the fuel system, it differed as to the cause of ignition of the fire. His opinion was that the leaking fuel would be vapourised by the heat and thus reach all parts of the engine compartment, including the alternator where it would most probably be ignited by the sparks generated by operation of the alternator.

5. This led the plaintiff's solicitors to propose amendments to the statement of claim reflecting that opinion. I will refer to these proposed amendments as the proposed pleading, using the terminology the judge used.

6. The proposed pleading was sent to the 2nd defendant's solicitors on 19th August 1993. They indicated their opposition pending receipt of counsel's opinion and suggested that the plaintiff apply by summons for leave to amend. That the plaintiff did and issued his summons on 23rd September 1993. It came before Deputy Judge Griffiths on 4th November with the result already indicated.

7. The numerous grounds in the plaintiff's notice of appeal, the three grounds in the 2nd defendant's notice and counsel's submissions can, in my view, conveniently be addressed under three heads.

(1) Whether the amendments in the proposed pleading seek to introduce a new cause of action or one that does not arise out of the same facts as did the original pleading?

8. I have already outlined the crux of the original pleading. The proposed pleading, instead of amending the four pages of which the original pleading consists, sought to replace it altogether with no less than seven pages of extensively particularised averments. Mr Michael Thomas, Q.C., who appears for the plaintiff with Mr Ruy Barretto, although admitting that the replacement might appear massive submits that in substance it embodies no more than the same cause of action as in the original pleading. The judge dealt with the matter in the following way at pp.13 and 14 of his judgment.

"It is clear that the plaintiff's cause of action contained in the writ and statement of claim (the original pleading) is for negligence, and that this is not changed by the proposed amendments. The negligence alleged both in paragraph 7 of the original pleading and in paragraph 16 of the proposed amendments is tortious, and not contractual. A necessary ingredient in the cause of action therefore is proof of damage causatively connected to that negligence. In paragraph 6 of the original pleading, in allegations against the 1st Defendant, the pleader alleged that the fire was caused by a leakage of petrol which accumulated and then overflowed onto the hot exhaust pipe, which was the means of ignition; and then in paragraph 7 'further or alternatively' pleaded that that fire was caused by the 2nd Defendant's negligent failures in connection with their servicing of the fuel system. The causation of the fire pleaded in the proposed amendments is similarly a leakage of petrol, but the means of ignition alleged is completely different, namely a spark."

The judge then turned to address the definition of cause of action accepting that given by Lord Esher M.R. in Coburn v Colledge [1897]1 QB 702 in substance that this consists of every fact which was necessary for the plaintiff to prove if traversed in order to support his right to judgment. He then continued:

"The critical issue is therefore whether the new allegation that the cause of ignition was a spark is a fact the Plaintiff would need to prove in order to succeed in his action. In my judgment it is not: the necessary averment on this part of the case is that the leakage of petrol caused the fire. The means by which the fire was ignited, whether by exhaust-pipe or by spark, is immaterial as part of the cause of action. The source of danger was the leakage of petrol into the engine compartment, and it was plainly foreseeable that such leakage would create a fire hazard, and, if a fire occurred, damage. The exact manner in which the petrol ignited (assuming a leakage caused by negligence) is immaterial: see Hughes v Lord Advocate [1963] AC 837. The remaining necessary allegations to complete the cause of action are common to the original pleading and to the proposed amendments, though pleaded with greater particularity in the latter".

9. Mr Coleman for the 2nd defendant, submits that the old and new cases raise different causes of action. each within its own matrix. Thus, he says, the old cause of action involved a breach of duty in that the 2nd defendant did something to a specific part of the fuel system which caused the leak of liquid petrol which ignited on contact with the hot exhaust-pipe whereas the new pleading raised a breach in failing to spot or prevent a pre-existing leak of vapourising petrol which was ignited by a spark in the alternator. He cites other particulars similarly. Clearly the particulars are different. Far more is pleaded in the proposed pleading. But at the end of the day it can be seen clearly from the original pleading that a case of negligence was pleaded in the following way: that the defendant was a private company carrying on the business inter alia of repairers and servicers of motor vehicles and as such it ought to have known that the lack of reasonable care in the repair or service of motor vehicles would result in loss or damage to the owners; that from about 13th October 1986 to about 4th November the motor vehicle underwent servicing at the garage of the 2nd defendant; that on 5th November 1986 a fire started in the engine section of the motor vehicle and then spread forward until the entire vehicle was burnt; that the fire was caused by the negligence of the 2nd defendant, its servants or agents in the repair or servicing of the said motor vehicle; that as a result of the fire the motor vehicle was destroyed and the plaintiff suffered loss and damage as a result of the 2nd defendant's negligence. That case of negligence can likewise clearly be seen to be reproduced in the new pleading; the embellishments including the additional particulars do not change that.

10. Before I leave the pleadings, it should be pointed out that the pleading in paragraph 6, the particulars upon which so much attention has been focused, was actually pleaded with reference to the 1st defendant although no point is taken as to this being confined to the plaintiff's case in respect only of the 1st defendant. As I have already said, it was not necessary to plead these particulars. Had they not been pleaded, the matter of negligence would in any event have been addressed and determined. If the cause could not be established by actual evidence the court would have been entitled to resort to the practical approach referred to by Megaw LJ in Lloyde v West Midlands Gas Board [1971]1 WLR 749 at 755C in explaining res ipsa loquitur.

"... it is no more that an exotic, although convenient, phrase to describe what is in essence no more than a common sense approach, not limited by technical rules, to the assessment of the effect of evidence in certain circumstances. It means that a plaintiff prima facie establishes negligence where: (i) it is not possible for him to prove precisely what was the relevant act or omission which set in train the events leading to the accident; but (ii) on the evidence as it stands at the relevant time it is more likely than not that the effective cause of the accident was some act or omission of the defendant or of someone for whom the defendant is responsible. which act or omission constitutes a failure to take proper care for the plaintiff's safety."

That would have enabled the court to have resorted to a practical approach. I pause here to say that I reject Mr Coleman's submission that the express particulars in terms of Mr Shum Lau's opinion shut out the operation of the maximum res ipsa loquitur.

11. Returning then to the matter of the particulars, the proposed pleading in effect as did the original pleading, pleaded the hazard of the petrol leakage caused by the negligence of the defendant. Mr Coleman however stressed that petrol is not as inflammable as generally supposed (and there is evidence of that before us) and moreover, that in the view of the experts the manner of ignition was part of the causation of the fire which would also require a considerable or sustained leakage of fuel. However, although petrol, even as vapour or a mixture designed to ignite in controlled conditions, does not always ignite as he pointed out (putting aside the consideration that it might normally do so), the fact that it does might sufficiently establish a hazard. But those are matters for trial. In the present context, it is the reference to the hazard that suffices and is central to the same cause of action and the same set of facts out of which it arises. In my judgment, the judge was right in his conclusion that the cause of action was not changed by the proposed amendments and also that the proposed amendments arose out of substantially the same facts as averred in the original pleading.

(ii) The Law

12. I turned then to address the second head of the matters raised in this appeal, i.e. the application of the relevant law which consists primarily of O.20 r.5 of the Rules of the Supreme Court. Once it is accepted that the proposed pleading does not seek to introduce a new cause of action, there is no difficulty in resolving the competing submissions. Sub-rule (1) of O.20 r.5 is the general provision empowering leave to be granted to amend pleadings. The well-established and well-known principles that apply to the exercise of this power may conveniently be taken from the summary given by Lord Brandon in Ketteman v Hansel Properties Ltd [1987]1 AC 189 at p.212F to which both sides have referred. Lord Brandon summarised then in the following four propositions:

"First, all such amendments should be made as are necessary to enable the real questions in controversy between the parties to be decided. Secondly, amendments should not be refused solely because they have been made necessary by the honest fault or mistake of the party applying for leave to make them: it is not the function of the court to punish parties for mistakes which they have made in the conduct of their cases by deciding otherwise than in accordance with their rights. Thirdly, however blameworthy (short of bad faith) may have been a party's failure to plead the subject matter of a proposed amendment earlier, and however late the application for leave to make such amendment may have been, the application should, in general, be allowed, provided that allowing it will not prejudice the other party. Fourthly, there is no injustice to the other party if he can be compensated by appropriate orders as to costs."

Plainly under sub-rule (1), leave would have to be given subject to the matter of injustice. However, Mr Coleman contends that it is sub-rules (2) and (5) which apply; those rules are concerned with leave to amend after the relevant period of limitation has expired. That situation would only arise if the proposed pleading introduced a new cause of action or one not founded upon the same or substantially the same facts. But those possibilities have been excluded and Mr Coleman's submissions therefore fail.

13. However, notwithstanding that his conclusions so far dealt with were clearly right, the judge then proceeded to address the question of injustice, and to that I now proceed.

(iii) Injustice and Prejudice

14. The judge in the end held that to allow the proposed pleadings would be an injustice to the defendants which could not be compensated by costs. He relied upon five reasons, adopting the grouping made by Mr Thomas.

(1) That Mr Nelson Wong and Mr Geekie would have difficulty in recalling in 1995 events that took place in 1986 and the defendants' procedures and systems.

15. There was no evidence to support these conclusions. The judge appears at least to have overlooked the burden that lay upon the 2nd defendant to prove them. Indeed, before us Mr Coleman contended that the burden lay upon the plaintiff. However, the legal position is quite clear that the burden lay upon the 2nd defendant. In Hancock Shipping Co v Kawasaki Heavy Industries Ltd The Casper Trader [1992]3 All ER at p.137, Staughton LJ put it in the following way:

"The burden of proof

In my judgment it is not helpful to speak of the burden of proof, but rather of the burden of persuasion. If the court concludes that it cannot decide whether or not it is just to allow the amendment, the party applying for leave must fail. The burden of persuasion lies on him, and if it is not discharged his application should not succeed.

But the party making the application cannot be expected to adduce evidence on all points which might conceivably affect the justice of the case. He must undertake the task of establishing the factors which he relies on as relevant; his opponent in turn may say that there are other relevant factors pointing in the other direction - and those are for him to prove. A factor of major importance in the present case is whether the builders will suffer prejudice because documents have been destroyed and witnesses are no longer available. It is for them to establish that, particularly since it would be difficult for the owners to do so: see the speech of Lord Griffiths in Dept of Transport v Chris Smaller (Transport) Ltd [1989]1 All ER 897 at 904, [1989] AC 1197 at 1208."

16. It may be added that Mr Nelson Wong was the mechanic who actually signed the service order for 14th October 1986 service. He was always a key witness and a full statement had been taken from him.

17. Likewise, Mr Geekie who was the 2nd defendant's general service manager was involved from the start. He specifically addressed the matter of prejudice occasioned by delay in his affidavit of 27th October 1993. His evidence on the point is confined to the non-availability of Mr Merrill, Mr John and Mr Whittle to whom I shall come. He does not suggest that the defendants could not prove their systems, neither does he say their records were missing.

(2) That Mr Merrill might not be able to give oral evidence in 1995 on those matters. Mr Merrill was a director and general service manager for the 2nd defendant's group. He has since died. However, he had made a long statement and might have been able to make other statements although it is in dispute whether he had an opportunity after the proposed pleading was notified to the 2nd defendant. Again, there is no evidence of injustice in this respect.

(3) That res ipsa loquitur casts an evidential burden on the defendants, exacerbated by staleness. It is clear that res ipsa loquitur does not have to be pleaded. See Bennett v Chemical Construction (GB) Ltd [1971]1 WLR 1571 at 1575 and 1576 per Davies LJ. The nature of res ipsa loquitur as explained by Megaw LJ in Lloyde v West Midlands Gas Board is also relevant. In the circumstances it is difficult to see how a plea of res ipsa loquitur, which did not have to be pleaded in the first case, can cause injustice to the 2nd defendant.

(4) That the defendants have been deprived of their chosen experts. The experts concerned were Mr John and Mr Whittle. Their evidence was concerned with refuting Mr Shum Lau's theory of ignition which, as I have said, has already been discarded by the plaintiff. In those circumstances it is difficult to see what evidence they could provide which other experts addressing the facts put to them could not.

(5) That the plaintiff progressed this case slowly. I think it indisputable that there was some delay on the part of the plaintiff. On the other hand, the 2nd defendant cannot be said to be entirely free from blame, not only in regard to delay but to some of its actions and the stance it adopted. The plaintiff's delay has also to be considered in the context of the difficulties he was confronted with in obtaining expert evidence. That sort of evidence reposed largely within the 2nd defendant's and associated organizations.

18. As I have already mentioned, the burden of establishing prejudice lay upon the 2nd defendant. And I repeat there is simply no evidence of that. On the contrary, the 2nd defendant took possession of the burnt-out vehicle on the very day of the fire or the day following, and it remained in the 2nd defendant's possession for many weeks. The plaintiff asked the 2nd defendant for a report and had reason to expect that one would be provided. In the end he was told there was no report. The defendants' experts had ample opportunity to inspect the burnt-out vehicle and in fact did so. Their opinion was that the cause of the fire could not be determined from it. If that is the case, then other experts should equally well be able to give evidence. There appear to be some records in existence. And finally, the 2nd defendant could have been in little doubt from the outset and certainly from 1988 when the writ was issued that it had to be prepared to meet a claim for damages in negligence.

19. For the foregoing reasons, I am satisfied that the judge misdirected himself in fact in concluding that the absence of Messrs Nelson Wong, Geekie, Merrill, John and Whittle or the effect delay had upon their memories caused injustice; that likewise he misdirected himself in law in relying upon res ipsa loquitur as casting an evidential burden. These misdirections vitiated the exercise of his discretion, which in my judgment in any event was wrong. For those reasons, I would allow the appeal, set aside the judge's order and made an order granting leave for the proposed pleading.

Litton, J.A.:

20. This is an interlocutory appeal. It concerns amendments to the statement of claim in an action commenced in January 1988. The events themselves go back to November 1986. Yet here we are in October 1994 dealing with an interlocutory matter, the case itself never having gone to trial.

21. The amendments giving rise to this appeal were proposed by the plaintiff in August 1993, nearly three months before the date fixed for trial. The application was first heard by Deputy Judge John Griffiths QC on 4 November 1993, the first day fixed originally for the trial of the action. For some reason the application was adjourned and adjourned again. It was eventually heard and completed at the end of that month. It was not until 2 June 1994 that the Deputy Judge gave his decision refusing leave to the plaintiff to amend. This is the sorry background to the plaintiff's appeal to this court.

22. The new averments of fact the plaintiff wishes to bring forward boil down to no more than these. (1) The cause of ignition was a spark from the alternator and not the petrol spilling onto the hot exhaust pipe and (2) failure on the part of the defendant's management to provide an adequate system or adequate procedures for training and supervising the mechanics.

23. As to the first matter the judge said quite rightly that it was not necessary for the plaintiff to prove the cause of ignition in order to succeed. This new allegation - or more accurately this new theory - is nothing more than the surmise of a new expert in place of the old. However awkwardly put, the plaintiff's case as pleaded is and has always been that the 2nd defendant was responsible in law for the leakage of petrol; this created a high risk of fire in the engine compartment; that and the resulting damage were foreseeable events.

24. Mr Coleman now says that the leakage of petrol in the engine compartment as such creates no hazard. So be it. This is a matter for trial. But if it be established at trial that the leakage of petrol into the engine compartment did create a substantial hazard, the means by which the fire was ignited - whether by the heat of the exhaust pipe or by a spark or perhaps by both - is immaterial to the cause of action. The judge so held and I cannot see how he can be faulted in his conclusion.

25. In this regard Lord Justice Davies's observation in Bennett v. Chemical Construction Limited [1971]1 WLR 1571 at 1575H is relevant:

"If the facts pleaded and the facts proved show that the cause of the accident was apparently and on its face due to some negligence, that is sufficient."

26. The latin maxim "res ipsa loquitur" adds nothing to the cause of action. I wholly agree with Megaw LJ when he said in Lloyde v. West Midlands Gas Board [1971]1 I WLR 749 at 755:

"I doubt whether it is right to describe res ipsa loquitur as a 'doctrine'. I think that it is no more than an exotic, although convenient, phrase to describe what is in essence no more than a common sense approach, not limited by technical rules, to the assessment of the effect of evidence in certain circumstances. It means that a plaintiff prima facie establishes negligence where: (i) it is not possible for him to prove precisely what was the relevant act or omission which set in train the events leading to the accident; but (ii) on the evidence as it stands at a relevant time it is more likely than not that the effective cause of the accident was some act or omission of the defendant or of someone for whom the defendant is responsible, which act or omission constitutes a failure to take proper care for the plaintiff's safety."

27. As to the second matter, the alleged failure to provide an adequate system or procedures for training etc., this is in effect to plead the underlying evidence, matters which technically need not and should not be pleaded: for it cannot be the plaintiff's case that the 2nd defendant owed the plaintiff some sort of duty in tort to have an adequate system or adequate procedures for the training of their own mechanics. One can reasonably assume that the defendant would have, from the very beginning, even before the writ was issued, looked to its own system and procedures to see whether there has been some failure in that regard. I cannot imagine how this so-called new allegation can cause surprise or injustice to the defendant, as the deputy judge seems to have found. In this regard the judge had plainly erred.

28. My Lord Nazareth J.A. has gone carefully into the deputy judge's conclusions for his decision and I need not go through those again, except to say that I wholly agree with what my Lord has said. What I find particularly regrettable is this. The deputy judge took into account the fact that by the time he entertained the plaintiff's application to amend over 7 years had elapsed since the fire. Yet he himself contributed to a further delay by taking over six months to give his decision. It cannot be emphasised too strongly that interlocutory matters in civil litigation must be dealt with expeditiously. When the plaintiff put forward the proposed amendments in August 1993, it was with a view to trial in November 1993. By that time the papers, in what should have been a simple action, had accumulated into many hundreds of pages. The deputy judge's approach in entertaining the application should have been to ensure that the case proceeded to trial as soon as possible. He had clearly lost sight of this paramount objective.

29. By refusing leave to amend what has the judge achieved? It was plain as plain can be that the pleading in paragraph 6 of the statement of claim was wrong. There was no tray above the exhaust pipe in which petrol could have accumulated. Counsel who was responsible for the original pleading had apparently been misled by the views expressed by the first expert. These things happen in civil litigation. How can it be right for the judge to refuse the deletion of paragraph 6 and in effect thrust that averment down the plaintiff's throat? The plaintiff's solicitors have apparently said in correspondence that the plaintiff was abandoning that averment. The effect of the judge's order is that an averment now abandoned nevertheless stands in the statement of claim. This alone, in my judgment, should have given the deputy judge pause.

30. In my view, the judge erred fundamentally in his approach to the exercise of his discretion. Whilst matters of pleadings are generally the responsibility of trial judges, and this court rarely interferes in such matters, this is a case in which we must intervene. The plaintiff's new pleading may not be ideal. It is certainly more than a statement in a summary form of the material facts on which the plaintiff relies: see Order 18 r7(1). But no complaint is made about its prolixity or the density of the facts pleaded. The defendant can plainly plead to it. Indeed, it has already prepared a defence in answer to the allegations, but this was not filed pending the determination of the summons to amend.

31. For the reasons given by my Lord Nazareth J.A. supplemented by what I have attempted to say I too would allow the appeal and order that the amendments to the statement of claim. by substitution be allowed.

Mayo, J.:

32. I agree entirely. There can be no doubt that the learned Deputy Judge was correct in deciding that the proposed amendments did not introduce any fresh causes of action. This being the case, the amendments should have been allowed unless it could be demonstrated that the 2nd defendant would be prejudiced as a result of leave being granted.

33. It seems to me that there was very little evidence of prejudice. The 2nd defendant's case is largely based upon a denial of the case being made out by the plaintiff. It is clear from the evidence which is available that the 2nd defendant has since November 1986 been in possession of all of the evidence and has been in a position to prepare any defence which may be available. We were referred to correspondence which indicated that it would not be possible from an examination of what was left of the Ferrari to ascertain with any satisfactory measure of precision what the cause of the fire would have been. This being the case, expert evidence would in all probability be confined to a consideration of theoretical aspects of the matter. There is no reason to suppose that the delay which undoubtedly has occurred would have had any detrimental effect in obtaining such evidence even Though it was approximately 7 years after the occurrence of the fire.

34. While accepting that this was a matter for the discretion of the learned Deputy Judge, I am satisfied that he wrongly exercised his discretion. I say this largely on the basis that the conclusions which he reached on the subject of prejudice were almost exclusively made on surmise rather than upon evidence which was before him. This being the case, there are sufficient grounds for us to interfere with the exercise of the discretion. Leave should have been granted for the amendments proposed.