QBE HONGKONG & SHANGHAI INSURANCE LTD v. SINOCITY INDUSTRIES LTD

DCCJ 2024/2022

[2025] HKDC 1376

IN THE DISTRICT COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

CIVIL ACTION NO 2024 OF 2022

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BETWEEN

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REASONS FOR DECISION

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Introduction

1.  This action was listed before me for trial. On 4 August 2025, the day before the trial was due to start on 5 August 2025, Hastings & Co, solicitors for the Plaintiff (“P”), wrote in to say they became aware of the fact that P’s sole witness had become unavailable for a medical reason and sought directions. I directed my clerk to inform the parties of my thoughts at the time, in writing, in these words, which he did: -

“With reference to Hastings & Co’s letter dated 4 August 2025, the parties are hereby put on notice that I am considering whether I should on my own motion dispose of the entire matter summarily via Order 14A, as it seems to me the sole issue is the construction of a single document, and live evidence is irrelevant.”

2.  On 5 August 2025, before the trial was to start, heavy rain in Hong Kong resulted in the Observatory’s issuance of the Black Rainstorm Warning Signal which in turn resulted in the Judiciary adjourning all cases throughout Hong Kong so the trial did not start. The parties therefore had a whole day to consider my thoughts, as communicated to them in writing previously, as explained above.

3.  On 6 August 2025, at the start of the hearing, Julia Lau (acting for P) properly informed me she had a word with her professional opponent Kwan Ping Kan (acting for the Defendant, “D”) and they agreed the parties would proceed by way of the Order 14A summary procedure, instead of a full-blown trial. Mr Kwan nodded in agreement. All of us dived right into the question of construction, examining the words used in the document to be construed by me (specifically, the employees’ compensation insurance policy between P and D numbered QG1-W0106819-WCA issued in 2016, “the Policy”) and relevant exchanges in relation to that followed. One of the things Ms Lau said to me was that she acknowledged her Statement of Claim (“SoC”), which was not settled by her, was not very good. Ms Lau, however, did not make any oral application for leave to amend the SoC at that stage and just sat down to let Mr Kwan have his turn.

4.  Mr Kwan rose to his feet and started his oral submissions. His oral submissions did not surprise me at all because they were foreshadowed by §§23 to 27 of his written submissions lodged on 28 July 2025, which I had read. I thanked Mr Kwan and invited Ms Lau to make her final speech in reply, if she considered necessary.

5.  When Ms Lau rose to her feet, to my surprise she said she had instructions to make an oral application for leave to amend her SoC. I then asked whether she had a draft, and she said no. So, I stood down the matter for her to provide everyone with a draft. Once her draft had been circulated we dealt with it. Mr Kwan opposed the oral application, calling it an abuse of process. After considering submissions from both sides, I dismissed the oral application, with costs, but reserved my reasons. These are my reasons for having dealt with the oral application in the manner as I did.

The Law

6.  P’s amendment application was governed by Order 20 rule 8 of the Rules of the District Court (Cap 336H). It was identical to the same rule in the Rules of the High Court (Cap 4A). So far as material, Order 20 rule 8 read: -

“(1) For the purpose of determining the real question in controversy between the parties… the Court may at any stage of the proceedings… order a pleading… to be amended…

(1A) The Court shall not under paragraph (1) order a pleading to be amended unless it is of the opinion that the order is necessary either for disposing fairly of the cause or matter or for saving costs…”

7.  P could of course also rely on Order 20 rule 5 of the Rules of the District Court (Cap 336H), etc.

8.  As I told the parties during the hearing, I was aware of the key authorities on amendment applications, including Yeung Wing Lun Alan v Yeung Chung Kwong [2023] HKCA 664, CRB v Mark Sutherland [2024] 1 HKLRD 106 [2023] HKCFI 2984, etc. In the District Court I was aware of Yip Wai Tak Vivian v Lee Ka Wo Esmond [2022] HKDC 621, which in turn adopted and applied Re Hin-Pro International Logistics Ltd [2016] 1 HKLRD 1367 (§8). HKCP 2025 referred to a plethora of other authorities at its §§20/8/6, 20/8/9, 20/8/11 and 20/8/21, all of which well-known and oft-cited. In particular, I was aware of the following 6 key principles: -

(1) It is a guiding principle of cardinal importance on the question of amendment that generally speaking 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.

(2) Leave is readily granted to amend before trial unless it can be shown that the new claim based on the proposed amendment is bound to fail. While the court is entitled to have regard to the merits of the case, it should only do so when the merits are readily apparent and are so apparent as not to require prolonged investigation.

(3) If the proposed amendments are bound to fail, no leave to amend should be granted. In this regard, the court will take the applicant’s proposed pleaded case to the highest.

(4) Absent any real prejudice, an application for amendment, albeit late, must be decided upon the general principle that a court of law seeks to adjudicate on the real issues and disputes between the parties and, if possible, technical and procedural rules should not stand in the way of allowing the parties to raise their real claims or defences before the court for adjudication.

(5) Where prejudice is claimed, the burden is on the party opposing the amendment to show prejudice. There is no injustice to the opposing party if he can be compensated by appropriate orders as to costs.

(6) Lastly, in giving effect to the underlying objectives of the Rules of the [District] Court, the court shall always recognize that the primary aim in exercising the powers of the court is to secure the just resolution of disputes in accordance with the substantive rights of the parties.

9.  Since Mr Kwan called P’s application an abuse of process, it would be helpful to look at §18/19/9 of HKCP 2025 where that concept, in the slightly different context of striking out pleadings, was explained by its learned editors. In gist, the process of this Court should only be used bona fide, properly, and must never be abused. This Court should always protect its own machinery and prevent it from being used by litigants improperly, and that included preventing it from being used as a means of vexation and oppression.

10.  It was with all of the above in mind that I carefully examined P’s proposed amendments and rejected them all.

P’s Proposed Amendments

11.  P’s original SoC simply alleged that in the Policy “the insured employees were specified to be ‘Director / Product & Service Manager / Sales & Marketing Manager’” and that since the injured employee was “a driver”, D’s liability to pay compensation to that employee was outside of the scope of the Policy.

12.  P’s original pleaded case was thus a simple one of contractual interpretation. If P’s interpretation of the Policy was correct, P should win. If P’s interpretation of the Policy was incorrect, P should lose.

13.  To put this in context, D alleged that on a proper interpretation of the Policy, the Policy covered “any” employee irrespective of job title, job nature or job description so that it covered the driver in question.

14.  P’s first set of proposed amendments was to add a reliance on other terms of the Policy, including the term that “(a) the due observance and fulfillment of the Terms of this Policy insofar as they relate to anything to be done or not to be done or to be complied with by the Insured; and (b) the truth of the statements and answers in the Proposal and Declaration and the Estimated Earnings Declaration and Actual Earnings Declaration shall be conditions precedent to any liability of the Company to make payment or to provide indemnity under this Policy”, and the term that “the Insured shall immediately notify the Company in writing of any material change in the risk insured hereunder made by the Insured or any other person during the Period of Insurance”. That reliance would be followed by a brand new factual allegation that D allegedly “never informed and/or disclosed” to P that D had in his employment any driver. If P’s first set of proposed amendments was allowed, P’s case in this action would turn from a simple case of contractual interpretation, suitable for Order 14A disposal, to a complicated and evidence-sensitive case of failure to disclose material information, unsuitable for Order 14A disposal.

15.  P’s second set of proposed amendments was to change its case on causation. P’s original plea simply asserted that “But for the operation of Section 43 of ECO”, P would not have to pay HK$302,598.90. P wanted to add an assertion that “As a result of its wrongful failure to disclose fully and accurately the employees” to P, P suffered a loss of HK$302,598.90. So, similarly, if P’s second set of proposed amendments was allowed, P’s case would turn from a case of causation by operation of law, suitable for Order 14A disposal, to a different evidence-sensitive case of “factually, P would have chosen to do things differently”, markedly unsuitable for Order 14A disposal. Indeed, P’s second set of proposed amendments, if allowed, would put both parties back to square one because factual evidence of the nature required to entertain P’s new pleas did not exist.

My View

16.  I agree with D’s categorization of P’s application as an abuse of process because simply put, by blowing hot and cold in the manner as it did, P was being frivolous, vexatious or oppressive. P could not on the one hand consent to this Court dealing with the whole matter by using the Order 14A summary procedure, and then on the other hand propose amendments which would have the effect of making that procedure inappropriate. I had specifically asked Ms Lau whether by making the oral application for leave to amend P’s SoC in the way it did P was withdrawing its previous consent to use the Order 14A summary procedure, and Ms Lau categorically denied that suggestion, saying her oral application would not affect P’s consent. I for my part could not see how any litigant could properly make a bona fide leave to amend application which, if allowed, would frustrate its previous consent to proceed by way of the Order 14A procedure. It was my ruling that P’s oral application for leave to amend was indeed an abuse of process, and on this ground alone it must be dismissed with costs.

17.  Secondly, P’s new case would be unsustainable and/or bound to fail so that no leave should be granted. Significantly, neither party could locate the original proposal form submitted by D to P in or before 2007 so that neither party could prove what was said or not said by D to P. Neither party could locate any reliable factual witness with actual knowledge as to what was said or not said by D to P. There was a suggestion that D alleged “no change” in an undated form, but that was neither here nor there as we would never know what D meant by that, or what P understood that phrase to mean at the time. “No change” could refer to “no change from our 2007 representation” and no one would be any wiser. P never filed any affidavit in support of its application showing how P’s new allegations could be true or proven to be true, and the inference I drew was that P was fully aware it could never have proven its intended new case. Attempting to run a brand new case knowing it would be unsustainable was also an abuse of process. On this ground also, P’s application must be dismissed with costs.

18.  Thirdly, the timing of P’s application was unexplained. This action was started by P on 1 June 2022. There was a period of over 3 years within which P could have amended its SoC. No application was made by P before 6 August 2025. Even for 6 August 2025, P obviously could have made the application for leave to amend at the beginning of the day, instead of at the completion of Mr Kwan’s speech on the substantive issues. The inference I drew was that P’s oral application was not bona fide at all, but was made to oppress or vex. That would also be indicative of an abuse of process. On this ground too, P’s application must be dismissed with costs.

19.  For all of the above reasons, I dismissed P’s application with costs.

Final Remarks

20.  I do thank Ms Julia Lau and Mr Kwan Ping Kan for their most able assistance.