HCA 2741/1998
IN THE HIGH COURT OF THE
HONG KONG SPECIAL ADMINISTRATIVE REGION
COURT OF FIRST INSTANCE
ACTION NO. 2741 OF 1998
______________________
BETWEEN
ARTA PROPERTIES LIMITED
Plaintiff
and
LI FU YAT TSO (李輔一祖)
1st Defendant
LEE (OR) LI SHU FONG (李樹晃)
2nd Defendant
LEE LIN (李練)
3rd Defendant
LEE KAM SHU (李錦樹)
4th Defendant
LEE LIN WAN (李連穩)
5th Defendant
LEE YUN LAM (李潤林)
6th Defendant
LEE YUK CHI (李沃志)
7th Defendant
LEE BING KI (李炳其)
8th Defendant
LEE WAI LING (李偉齡)
9th Defendant
LEE CHIU WAN (李照穩)
10th Defendant
______________________
Before : Mr Recorder Paul Shieh SC in Chambers
Date of Hearing : 6 November 2006
Date of Judgment : 5 January 2007
______________________
J U D G M E N T
______________________
1. This is an appeal by the 5th to 10th Defendants from an Order of Master Lung dated 15th May 2006, under which he (i) granted leave to the Plaintiff to re-amend its Statement of Claim subject to the provision of particulars under paragraph 23 of the pleading and (ii) dismissed the 5th to 10th Defendants’ application for specific discovery by summons dated 21st July 2005 (“the Discovery Summons”).
2. Although there are ten defendants to this action, the 1st to 4th Defendants had applied for a stay of the claim against them in favour of arbitration in 1998 and by an order dated 2nd June 1998, Mr. Justice Findlay stayed the claim against the 1st to 4th Defendants in favour of arbitration. The action only continued as against the 5th to 10th Defendants.
3. An initial question arose as to whether the 5th to 10th Defendants’ discovery application is based on the amended Statement of Claim or the re-amended Statement of Claim. This question is relevant to the order in which I should deal with the two appeals. Counsel for the 5th to 10th Defendants informed me that her contention would be that the documents sought by the Discovery Summons were discoverable on either version of the Statement of Claim (i.e. on the amended Statement of Claim and on the re-amended Statement of Claim). Be that as it may, I think it is more appropriate for me to deal first with the appeal relating to the re-amended Statement of Claim. It is only after one has ascertained the applicable pleading that one can sensibly and meaningfully address the question of discovery, given that discoverability of a document is based on relevance and relevance is defined by the pleadings.
The pleadings: the amended Statement of Claim
4. The original Statement of Claim was dated 23rd February 1998. Pursuant to leave granted on 5th July 2004, it was amended. For present purposes it is sufficient to set out the gist of the Plaintiff’s claim as pleaded in the amended Statement of Claim.
5. According to the amended Statement of Claim, the Plaintiff was a company incorporated in Hong Kong. The 1st Defendant is a Tso (“the Tso”) administered by the 2nd to 4th Defendants; it was also the registered owner of a property known as Lot No.539 in Demarcation District No.112, Yuen Long, New Territories, Hong Kong (defined in the pleading as “the Premises” but which shall be called “Lot 539” in this Judgment). The 5th to 10th Defendants were members of the Tso and were all present at a meeting of the Tso in early 1993.
6. The amended Statement of Claim went on to aver that by a written agreement dated 17th August 1992 (defined by the amended Statement of Claim as “the agreement”) made between the Plaintiff on the one part and the Tso under its lawful attorney and trustees the 2nd to 4th Defendants on the other part, it was agreed that the Tso would assist the Plaintiff to develop a residential estate by erecting 12 blocks of three-storied Spanish-type houses on Lot 539 for (i) the payment of HK$550,000 and (ii) 3 blocks of the three-storied Spanish-type houses.
7. The pleading then went on to set out several express terms of the agreement. Broadly speaking, those terms provided that:
(1)
The Tso would, at the Plaintiff’s costs and expenses, execute Deed Polls for the sub-division of Lot 539 into at least 12 smaller portions to be decided by the Plaintiff suitable for the erection of the three-storied Spanish type houses.
(2)
The Tso would also transfer or assign as beneficial owner the partitioned portions of Lot 539 to 9 indigenous villagers nominated by the Plaintiff at the law firm nominated by the Plaintiff and to 3 indigenous villagers nominated by the Plaintiff at the law firm nominated by the Tso so as to enable the 12 indigenous villagers to apply for the appropriate building licences or new grants from the relevant government department(s) and also to apply to the Yuen Long District Office for its consent pursuant to section 15 of the New Territories Ordinance (cap.97).
(3)
The Tso was also to sign, at the Plaintiff’s costs and expenses, all the relevant deed polls, instruments, documents, etc regarding Lot 539 from time to time requested or directed by the Plaintiff to do so.
(4)
The Plaintiff was to commence construction work on “the said Development” (this phrase is not defined in the pleading) in Lot 539 and to give first priority to commence the building works for the Tso’s houses and to complete the Tso’s houses for human habitation within one and a half years after the issuance of the certificates of exemption in respect of works for the Tso’s houses. Liquidated damages of HK$300 per day were also provided in the event of delay beyond the said one and a half years.
(5)
Upon the issuance of the certificates of exemption, the Plaintiff was to pay HK$550,000 to the Tso.
(6)
The Plaintiff would upon transfer of Lot 539 to the 1st indigenous villagers deposit a sum of HK$1,00,000 with the Tso’s solicitors who would hold the sum as stakeholders as security against the Plaintiff’s possible failure to fulfill its obligations under the agreement.
8. There then followed an important section of the amended Statement of Claim, under the heading of “The 2nd Agreement”. In view of their importance I set out the relevant paragraphs verbatim below (I have not indicated which words were added by amendment and underlined in red, nor have I included words that had been deleted by amendment and struck out in red:)
“ The 2nd Agreement
7.
Sometime in early 1993, the 1st Defendant under its lawful attorney or trustees the 2nd to 4th Defendants called its meeting of members.
8.
In the said meeting in which the 2nd to 10th Defendants attended it was discussed that the agreement to modified so that the premises be divided into thirteen portions to be transferred to the Plaintiff or its nominees. The 2nd to 10th Defendants intimated their support and authorization and it was resolved that the premises be divided into 13 portions and to be transferred to the Plaintiff or its nominees in return for the Plaintiff’s promise to make available 9 car park spaces and the grant of a right of way on the portion assigned to the Plaintiff (‘the 2nd agreement’).
9.
The 2nd agreement was then made between the Plaintiff and the 2nd to 4th Defendants for the Defendants.
10.
It is averred the Defendants had agreed which was evidenced by reason of the above resolution, that under the 2nd agreement:-
(a)
The premises after its division may be occupied by owners who did not come within from the same village;
(b)
The thirteenth portion being the remaining portion of the premises was to be transferred to the Plaintiff and to be used at its discretion.
11.
Further pursuant to the agreement and the 2nd agreement, the 1st Defendant under its lawful attorney or trustees applied to the District Office Yuen Long for its consent for the division of the premises into thirteen portions pursuant to Section 15 of the New Territories Ordinance Cap.97 Laws of Hong Kong.
12.
By a Deed dated 19th May, 1993 and registered in New Territories Land Registry by Memorial No.555004, the 1st Defendant under its attorney or trustees the 2nd to 4th Defendants sub-divided the premises into 13 portions, namely Demarcation District No.112 Lot Nos.539A-L and RP.
13.
By thirteen divers assignments all dated 19th May, 1993 and registered in the New Territories Land Registry by Memorial No.555005 to 555017 the 1st Defendant under its lawful attorney or trustees the 2nd to 4th Defendants transferred the premises in the following manner:-
Schedule
(a)
DD 112 Lot Nos.539A-L to 12 indigenous villagers;
(b)
DD 112 Lot No.539 RP to the Plaintiff.
14.
Further pursuant to the agreement the Plaintiff paid for all the costs of application for the building licenses or new grants for erecting 12 small houses on the respective divided portions in the premises in accordance with the current specifications of the New Territories Houses or small house policy on DD 112 Lot Nos.539A-L under the names of the said 12 indigenous villagers.
15.
The 2nd agreement was further evidenced by a supplemental agreement dated 21st March, 1997 (“the supplemental agreement”) where the Plaintiff on the one part and the Defendants on the other part agreed that the agreement be amended to:-
Schedule
(a)
The time under the agreement for obtaining approval from the relevant government department be extended from 2 and a half years to 5 years and eight months from the date of the agreement, as a result the date due for obtaining the relevant approval from the relevant government department under the agreement became 16th April, 1998.
(b)
The liquidated damages under the agreement at clause 3(c) be amended from HK$300.00 per day to HK$1,000.00 per day;
(c)
The 9 parking spaces allocation under clauses 3(j) of the agreement be amended that the Plaintiff shall upon completion of the said Development arranged to carve out several small portions in D.D. 112 Lot No.539 RP, each being a sufficient space for parking at least one motor vehicle. The Plaintiff shall then assign 9 small portions as designed and chosen by the 1st Defendant or it nominee(s) or purchaser(s) at the Plaintiff’s own costs and expenses and without any consideration from the 1st Defendant to the Plaintiff.
16.
Further, in reliance to the 2nd agreement and the supplemental agreement sometime on 18th April, 1997 the Plaintiff caused to sub-divide DD 112 Lot No.539 RP into 7 smaller portions, namely DD 112 Lots Nos.539M, N, P-S and R.P. and by 6 divers assignments all dated in June, 1997 6 portions, namely DD 112 Lot Nos.539M, N, P-S was assigned by the Plaintiff to 6 indigenous villagers.
17.
It is averred that at all times the area remained with DD 112 Lot No.539 RP was more than sufficient for the purpose of maintaining a car park as designed by the 1st Defendant and to enable the 1st Defendant, its nominee(s) or purchaser(s) to choose the said 9 portions pursuant to the 2nd agreement and the supplemental agreement.
18.
Further, the Plaintiff paid for the costs of the application for the appropriate building licenses or new grants for erecting 6 small house in accordance with the current specifications of the New Territories Exempted House or small house policy on DD 112 Lot Nos.539M, N, P-S under the names of the said 6 indigenous villagers.
19.
Sometime in early July, 1997 the District Lands Office, Yuen Long caused to post the notice of application of the 18 indigenous villagers for the appropriate building licenses or new grants at Ngau Keng Tsuen and Lin Fa Tei.
20.
In breach of the agreement and the 2nd agreement the 5th to 10th Defendants and eleven other villagers of Ngau Keng Tsuen objected to the said application of the said 18 indigenous villagers on the following reason:-
(a)
By a letter dated 16th July, 1997 the 5th Defendant wrote to the District Lands Office Yuen Long and objected the applications of the 18 indigenous villagers on ground of feng shui;
(b)
By a letter dated 21st July, 1997 the 6th to 10th Defendants together with eleven other villagers of Ngau Keng Tsuen wrote to the District Lands Office Yuen Long and objected on the grounds that the purchasers of the respective portions of the premises, except one, were not villagers of Ngau Keng Tsuen and the building of 18 small houses were against feng shui.”
9. Several comments can be made about these paragraphs (I stress that Mr. Andy Hung, counsel for the Plaintiff appearing before me and who settled the re-amended Statement of Claim, was not responsible for the state of the amended Statement of Claim):-
(1)
Paragraph 8 of the amended Statement of Claim was the paragraph which defined “the 2nd agreement”. However, paragraph 8 did not expressly set out how that agreement (i.e. “the 2nd agreement”) was made with the Plaintiff . The first part of that paragraph pleaded what happened at the early 1993 meeting. That, however, was a meeting of the Tso’s members. It was not pleaded that any representative from the Plaintiff attended the said meeting.
(2)
Paragraph 9 pleaded that the “2nd agreement” (already defined in paragraph 8) was “then” made between the Plaintiff and the 2nd to 4th Defendants for the Tso. It was not pleaded when, under this paragraph, the 2nd agreement was “then” made. It is not clear whether the combined effect of paragraphs 8 and 9 is that:
(a)
the 2nd agreement was actually made during the meeting pleaded in paragraph 8 (if so then it raises the question of how the Plaintiff could claim to be a party to such an agreement when it has not pleaded its presence or assent) or
(b)
the 2nd agreement was actually made at an undefined time after the meeting in early 1993.
(3)
Whichever way one understands the plea about the 2nd agreement, one thing is clear. The 2nd agreement must have been made some time in 1993 and at any rate prior to 19th May 1993. This is because paragraph 11 of the amended Statement of Claim pleaded that pursuant to the agreement and the 2nd agreement, the Tso applied for consent to sub-divide Lot 539 into thirteen portions and paragraph 12 went on to plead the deed of partition dated 19th May 1993. The 2nd agreement (pursuant to which the land was partitioned) must necessarily have been entered into before the date of the deed of partition.
(4)
I confess I had great difficulties in understanding paragraph 10. In particular, I do not understand whether the two sub-paragraphs (namely (a) and (b)) of paragraph 10 are intended to set out the subject of further express terms of the 2nd agreement agreed between the parties (i.e. over and above the terms pleaded in paragraph 8), or whether those two sub-paragraphs are merely intended to set out the consequential effect (whether by way of implication, or by way of a process of interpretation) of the express terms of the 2nd agreement pleaded in paragraph 8.
(5)
Whichever way one understands the plea in paragraph 10, the terms pleaded in that paragraph must have come into existence prior to 19th May 1993. Those two sub-paragraphs are said to be agreed “under the 2nd agreement” and I have already commented on the timing of the 2nd agreement.
(6)
Then at paragraph 15 of the amended Statement of Claim the 2nd agreement was pleaded to be “further evidenced” by a supplemental agreement dated 21st March 1997 (defined by paragraph 15 as “the supplemental agreement”). The terms of the supplemental agreement pleaded in that paragraph, however, did not include the terms pleaded in paragraph 10.
(7)
The essence of the Plaintiff’s claim is that by reason of “the agreement and the 2nd agreement” it had the right to construct not only one Spanish-type house on each of Lots 539A-L (i.e. 12 in total), but also to construct 6 additional houses on Lot 539 RP (I use this to denote the Remaining Portion of Lot 529 before its further sub-division into Lot 539M, N, P-S and RP). That is the only basis upon which it could claim (in paragraph 20) that the 5th to 10th Defendants were acting “in breach of the agreement and the 2nd agreement” by objecting to its constructing of a total of 18 houses on Lot 539. The only part of the pleading remotely referable to the Plaintiff’s entitlement to use Lot 539 RP is paragraph 10. The terms in paragraph 10 must have come into existence before 19th May 1993.
10. The upshot of the above is that under the amended Statement of Claim, the Plaintiff derived its entitlement to claim against the 5th to 10th Defendants from the “2nd agreement” (as defined therein) which took place prior to 19th May 1993.
The pleadings: the re-amended Statement of Claim
11. When it came to the re-amended Statement of Claim, the amended Statement of Claim underwent some dramatic changes.
12. First, the written agreement dated 17th August 1992 (previously defined in the amended Statement of Claim as “the agreement”) is re-defined in the re-amended Statement of Claim as “the Deed”. It is pleaded that under the prevailing policy in 1992, only part of Lot 539 could be used to build small houses. It is also averred that on a true and proper construction of the Deed, the 12 indigenous villagers to be nominated for applying for building licences were not confined to local villagers of Ngau Keng Tsuen of Pat Heung, Yuen Long.
13. Second, and more importantly, the whole of paragraphs 7-13 of the amended Statement of Claim (which pleaded the formation of the “2nd agreement” and its terms and effect) were deleted. Instead, new paragraphs were inserted. These are important paragraphs and I set them out below verbatim (again I have not indicated which words were added by re-amendment and which words had been deleted):-
“
8.
In or about early 1993 the Plaintiff duly notified the 2nd to 4th Defendants the manner of the carving out of Lot 539 into 13 Sections.
9.
Further, in or about early 1993 the members of the Tso including the 5th to the 10th Defendants unanimously agreed in a meeting that Lot 539 should be subdivided into thirteen sections, namely, Section A, Section B, Section C, Section D, Section E, Section F, Section G, Section H, Section I, Section J, Section K, Section L and Section RP and to sell the same to the Plaintiff.
10.
Subsequent to the aforesaid meeting, the 2nd to 4th Defendants showed and provided a copy of the minute of the meeting signed by the 2nd , 3rd and 4th Defendants as the managers and the members of the Tso to the Plaintiff.
11.
In or about March 1993 upon the Tso and/or the 2nd to 4th Defendants’ application, the District Lands Office, Yuen Long granted consent to the Tso and/or the 2nd to 4th Defendants to enter into a Deed Poll regarding the carving out of Lot 539 into thirteen sections and to sell the lands.
12.
Pursuant to the Deed, in or about May 1993 the Tso and/or the 2nd to 4th Defendants by a Deed Poll dated 19th May 1993 duly partitioned and/or subdivided Lot 539 into Section A, Section B, Section C, Section D, Section E, Section F, Section G, Section H, Section I, Section J, Section K and Section L each with an area of 0.04 or 0.03 acre for building of 12 blocks of small houses (total 0.41 acre), and Section RP with an area of 0.56 acre.
13.
Pursuant to the Deed, by various assignments dated 19th May 1993 Sections A to L of Lot 539 were accordingly assigned by the Tso and/or the 2nd to 4th Defendants to nine indigenous villagers nominated by the Plaintiff and three other indigenous villagers nominated by the Tso and/or the 2nd to 4th Defendants; the Plaintiff caused the said 12 indigenous villagers to apply and they duly applied to the District Lands Office, Yuen Long for building licence subsequently.
14.
At all material times the 2nd to 4th Defendants who executed the assignments and/or the members of the Tso knew or ought to have known that none of the assignees of Sections A-L of Lot 539 were local villagers of Ngau Keng Village of Pat Heung.
15.
Further pursuant to the Deed the Plaintiff paid for all the costs of application for the building licences or new grants for erecting 12 small houses on the respective divided portions in the premises in accordance with the then existing specifications of the New Territories Houses or small house policy on DD 112 Lot Nos.539A-L under the names of the said 12 indigenous villagers.
The Sale of Section RP
16.
By an agreement made in or about May 1993 between the Plaintiff on the one part and the Tso and/or the 2nd to 4th Defendants on the other part, the Tso and/or the 2nd to 4th Defendants agreed to sell Section RP to the Plaintiff at the price of $190,000; by an assignment dated 19th May 1993 the Tso and/or the 2nd to 4th Defendants accordingly assigned all the estate, right and interested in Section RP to the Plaintiff.
17.
After the Plaintiff became the registered owner of Section RP, at all times, the Plaintiff and/or its assigns or successors have all the right or interest to use, occupy or enjoy Section RP.
18.
Despite the Deed had been entered into, the Plaintiff and the Tso and/or the 2nd to 4th Defendants had not been able to carry out the proposed development due to the fact that the Tso and/or the 2nd to 4th Defendants had illegally filled up a fish pond situated at Lot 539 without the permission of the District Lands Office, Yuen Long; further the investors informed the Tso and/or the 2nd to 4th Defendants that they intended to pull out from the development; as a result the Tso and/or the 2nd to 4th Defendants and/or the members of the Tso started to look for investors to continue the proposed development; Mr. Lee Hang Kwong, the agent of the Tso and/or the 2nd to 4th Defendants and/or the members of the Tso accordingly approached Mr. Kan who was experienced in development in New Territories for the proposed taking over of the interest of the investors but Mr. Kan declined to take up the proposed development.
19.
In or about September 1995, the Hong Kong Government started a new planning policy under which the village zone of Ngau Keng Tsuen was extended to cover the whole of Lot 539 and small houses could be built on the whole of Lot 539.
20.
Sometimes in or about 1996 Mr. Lee Hang Kwong, the agent of the Tso and/or the 2nd to 4th Defendants and/or the members of the Tso approached Mr. Kan again.
21.
In the course of the negotiation, Mr. Kan informed the 2nd to 4th Defendants and/or the members of the Tso through their agents, namely, Mr. Lee Hang Kwong and/or Lee Kwai Wo and/or Lee King Lung and/or Lee Chow Fat that he would only be prepared to take over the Plaintiff company and to continue the development at Lot 539 on condition that the Plaintiff could build six small houses at Section RP; the agents of the 2nd to 4th Defendants and the members of the Tso on the other hand expressed their concern, inter alia, if 6 houses built, the nine car parking spaces to be allotted to them might be too small.
22.
In or about March 1997 the Plaintiff on the one part and the agents, namely, Lee Kin Lung and/or Lee Chow Fat, of the 2nd to 4th Defendants and/or the members of the Tso on the other part agreed (“the 2nd Agreement”), inter alia, that the Tso and/or the 2nd to 4th Defendants or their nominees would be assigned nine car parking spaces built on lands to be carved out from Section RP each of which shall have enough space for parking at least one motor vehicle and that the liquidated damages for delay would be increased from $300 per day to $1,000 per day. The 2nd Agreement is evidenced by the Supplemental Deed pleaded hereinbelow.
23.
Further, upon the liaison pleaded in Paragraph 21 hereinabove Mr. Kan and/or Mr. Lee King Cheong of the Plaintiff on the one part and the aforesaid agents of the Defendants on the other part reached the understanding that the Plaintiff could build six small houses at Section RP provided that the nine car parking spaces to be allotted to the Tso would be sufficiently large; thereafter by a collateral agreement (“the Collateral Agreement”) made orally between Mr. Kan and/or Mr. Lee Kin Cheong of the Plaintiff on the one part and Mr. Lee Hang Kwong and Mr. Lee Kwai Wo for and on behalf of the 2nd to 4th Defendants and/or members of the Tso on the other part during a meeting held in or about early August 1996 at Yat Yuet Shark’s Fin Seafood Restaurant in Yuen Long, New Territories that the Plaintiff could build or caused to be built, apart from nine car parking spaces, six small houses at Section RP. In the meantime, the 2nd to 4th Defendants caused Messrs. George Y. C. Mok & Co. to draft the Supplemental Deed pleaded hereinabove in Paragraph 22. The Supplemental Deed as it turned out included further the term in relation to increase of liquidated damages but omitted to include the right of the Plaintiff to build six small houses on Section RP. [I pause here to note that the wording of paragraph 23 in the draft re-amended Statement of Claim placed before the Master is not in this form. When granting leave to the Plaintiff to re-amended Statement of Claim the Master required particulars to be given under paragraph 23. Subsequent to the Master’s order granting leave, the Plaintiff supplied the wording of paragraph set out above. I have not set out the wording of the “paragraph 23” which was before the Master, because that has been overtaken by the current version.]
24.
Further or alternatively, the Plaintiff says that the 2nd Agreement and the Collateral Agreement are part of a composite agreement (“the Composite Agreement”).
25.
It was an implied term of the 2nd Agreement and/or the Collateral Agreement and/or the Composite Agreement, by reason of business efficacy or the obvious intention of the parties, that the parties to the agreement should not take any step to prevent the performance of the contract and that the parties should use their best endeavour to co-operate in the performance of the contract.
26.
Further, at no time in the course of the negotiation or the making of the 2nd Agreement and/or the Collateral Agreement and/or the Composite Agreement, had the 5th to 10th Defendants or their agents ever complained that the indigenous villagers who had been assigned Sections A to L were not local villagers of Ngau Keng Tsuen of Pat Heung, Yuen Long.
27.
Upon the 2nd Agreement and/or the Collateral Agreement and/or the Composite Agreement were entered into,
(1)
the Plaintiff and/or the 2nd to 4th Defendants executed a Supplemental Deed dated 21st March 1997 and agreed to vary the Deed; the Supplemental Deed contained the following terms, inter alia, that the Plaintiff shall upon the completion of the development cause the transfer or assign of nine car parking spaces which are to be constructed on lands carved out from Section RP to the Tso and/or the 2nd to 4th Defendants or their nominees and that the car parking spaces shall have enough space for parking at least one motor vehicle; that the Plaintiff shall grant a right of way over a portion of Section RP so as to enable the Tso and/or the 2nd to 4th Defendants or their nominees to access or egress from the small houses assigned to them;
(2)
the Plaintiff by a Deed Poll dated 18th April 1997 accordingly subdivided the original Section RP into, inter alia, Sections M, N, P, Q, R, S and R.P. of Lot 539; and
(3)
the Plaintiff as the owner of the original Section RP by six assignments dated 16th May 1997 assigned respectively Sections M, N, P, Q, R and S to six indigenous villagers; in the premises, the six indigenous villagers acquired all the rights and interest to use occupy and enjoy the respective Section of land.
28.
The Plaintiff caused in or about May 1997 the six indigenous villagers who have become the registered owners of the respective part of Sections M, N, P, Q, R and S to apply and they duly applied to the District Lands Office, Yuen Long for building licence
29.
Further, the Plaintiff paid for the costs of the application for the appropriate building licenses or new grants for erecting 6 small houses in accordance with the then existing specifications of New Territories Exempted House or small house policy on DD 112 Lot Nos.539 M, N, P0S under the names of the said 6 indigenous villagers.
30.
Sometime in early July, 1997 the District Lands Office, Yuen Long caused to post the notice of application of the 18 indigenous villagers for the appropriate building licenses or new grants at Ngau King Tsuen and Lin Fa Tei.
31.
In or about July 1997, the 5th to 10th Defendants together with eleven other members of the Tso wrongfully and in breach of contract objected to the development of the proposed 18 small houses at Sections A to L and Sections M, N, P, Q, R and S of Lot 539 under the excuse that save one of the owners, all the owners assigned the lands carved out from Lot 539 were not local villagers of Ngau Keng Tsuen of Pat Heung, Yuen Long and/or the excuse that the development would affect the fung sui of the village.
32.
The 5th to 10th Defendants threaten and intend unless restrained by this Court from so doing to continue their objection to the development of the proposed 18 small houses at Sections A to L and Sections M, N, P, Q, R and S of Lot 539.
Particulars
On a day in December 1997, Lee Hang Kwong arranged a meeting at the Ngau Keng Tsuen Office whereby Mr. Kan of the Plaintiff and, amongst other members of the Tso, the 5th to 10th Defendants were present; the 5th to 10th Defendants represented to Mr. Kan that they would disregard whatever had been agreed between the Plaintiff and the Tso and/or the 2nd to 4th Defendants and/or the members of the Tso; that they would only be prepared to withdraw or cause to be withdrawn the objection made to the District Lands Office on condition that the Plaintiff would on top of the three blocks of small houses and the nine car parking spaces they already promised, further assign another block plus one floor in a block, as well as one additional car parking space to the Tso and/or the 2nd to 4th Defendants and/or their nominees.”
14. The following comments can be made on the proposed re-amendments:-
(1)
The meeting in early 1993 (pleaded in paragraphs 7 and 8 of the amended Statement of Claim) still featured in the re-amended Statement of Claim but it was no longer pleaded that any agreement was reached between the Plaintiff and the Tso (or any of the 5th to 10th Defendants) at or about the time of this meeting.
(2)
Like in the amended Statement of Claim, the Plaintiff is claiming an entitlement to build six small houses on Lot 539 RP. In support of this entitlement, however, the Plaintiff now relies on an express agreement (defined as the “Collateral Agreement”) that the Plaintiff could build six houses as well as nine car parking spaces on Lot 539. Particulars of the Collateral Agreement were given pursuant to Master Lung’s order granting leave to re-amend, and paragraph 23 of the re-amended Statement of Claim set out above had already incorporated such Particulars. Essentially it is averred that such an agreement was made orally between one Mr. Kan “and/or” Mr. Lee Kin Cheong for the Plaintiff and Mr. Lee Hang Kwong and Mr. Lee Kwai Wo for the 2nd to 4th Defendants “and/or” members of the Tso in or about early August 1996 in a restaurant in Yuen Long .
(3)
Apart from this express agreement, the Plaintiff also appeared to be mounting an argument that by reason of the assignment of Lot 539 RP by the 2nd to 4th Defendants to it on 19th May 1993 it was cloaked with “all the right or interest to use, occupy or enjoy” Lot 539 RP (see paragraphs 16 and 17 of the re-amended Statement of Claim). I take that to include the right to build whatever it wished on the land (subject of course to the prevailing small house policy of the Hong Kong Government). A similar argument was at one time raised by the Plaintiff’s then solicitors in a letter dated 7th August 1997 to the 5th to 10th Defendants’ solicitors.
15. The upshot of the above is that the Plaintiff now relies, for its entitlement to build six houses on Lot 539 RP, on a two-pronged argument. Firstly it relied on the Collateral Agreement reached in August 1996 and secondly it relied on its inherent rights as owner of Lot 539 RP as a result of the assignment of that land to it by the 2nd to 4th Defendants.
The 5th to 10th Defendants’ opposition to the re-amendment
16. In relation to the application for leave to re-amend, the 5th to 10th Defendants objected on the basis of two points, firstly that the effect of the amendments would be to add a new cause of action which was time barred as at the date of the application and the case does not fall within the provisions of Order 20 rule 5(5); secondly that they would be prejudiced by the amendments.
17. The Plaintiff’s position is that, as to Order 20 rule 5(5), there was no addition of a new cause of action and even if the amendments did have the effect of introducing a new cause of action, the new cause of action was based on the same or substantially the same facts as a cause of action already pleaded (and therefore falling within the permissive provisions of Order 20 rule 5(5)).
18. As far as Order 20 rule 5 is concerned, the law is reasonably clear. Where amendments do not involve the addition of a new cause of action which is time-barred as at the date of the application, the court has a wide discretion in allowing amendments under Order 20 rule 5(1). However, where the effect of the amendment is to add a new cause of action which is time-barred, then the governing provision is Order 20 rule 5(5). Unless the new cause of action is based on the same or substantially the same facts, leave must be refused: Paragon Finance plc v DB Thakear & Co. [1999] 1 All ER 400 at 404c-d per Millett LJ (as he then was). There is no scope for any form of “residual discretion” to grant leave to introduce a time-barred new cause of action which is not based on the same or substantially the same facts as a previously pleaded cause of action.
19. In my view the proposed re-amendments to the Statement of Claim do have the effect of introducing a new cause of action.
20. The classic definition of “cause of action” is that given by Diplock LJ in Letang v Cooper [1965] 1 QB 232 at 242-243 “A cause of action is simply a factual situation the existence of which entitles one person to obtain from the court a remedy against another person”.
21. This is not greatly different from that given by Lord Esher MR in the context of limitation in Coburn v Colledge [1897] 1 QB 702 at 706:- “every fact which it would be necessary for the plaintiff to prove, if traversed, in order to support his right to the judgment of the court” (see also Paragon Finance v DB Thakerer & Co. at 405d-g per Millett LJ). These definitions focus on the pleading of material facts sufficient to give rise to a claim that is not susceptible to being struck out.
22. However, that does not mean that no material fact could ever be added or amended after the expiry of limitation period. The concept of a “new cause of action” had been explained further by Holroyd Pearce LJ in Robinson v Unicos Property Corp. Ltd [1962] 1 WLR 520 at 525 as meaning “a new claim made on a new basis” (applied in Hong Kong in Red Sea Insurance Ltd. v Bouygues SA & others [1993] 2 HKLR 161 at 167 per Sir Derek Cons VP, a point unaffected by the subsequent appeal to the Privy Council).
23. In Robinson itself, the additional averment (unsuccessfully objected to as constituting the addition of a new cause of action) was to plead that the first plaintiff sued as equitable assignee of the benefit of a contract made with the defendant (the contract itself having been pleaded in the original claim); in Red Sea the additional averment (again unsuccessfully objected to as constituting the addition of a new cause of action) was to add a plea of foreign law to explain how the plaintiff was able to assert the cause of action pleaded in the original Statement of Claim.
24. In this case, it is not enough to say that both the amended Statement of Claim and proposed re-amended Statement of Claim asserted claims “in contract”. That would be to view the matter at too high a level of generality. The cause of action pleaded in the amended Statement of Claim is a cause of action in contract, based upon “the 2nd agreement” which involved events in 1993. The causes of action pleaded in the re-amended Statement of Claim are (i) a cause of action in contract, based upon “the Collateral Agreement” which involved events in 1996 and (ii) a cause of action based on the inherent right of a property owner (as a result of the assignment of Lot 539 RP to the Plaintiff in 1993). New material facts (such as the date and place of the agreement and the terms of the agreement) are pleaded and the claim is made on the basis of a new (and different) contract. The proposed re-amendments go further than, say, merely to clarify the capacity in which a party sues (cf. Robinson ), or to plug a gap caused by the omission of material facts relevant to a claim asserted in the original pleading (cf. Red Sea ), or to supplement or expand on some material facts already pleaded.
25. In order to obtain leave to re-amend, therefore, the Plaintiff will have to show that the causes of action introduced by the re-amendment, though new, are based on the same or substantially the same facts as a cause of action in respect of which relief has already been claimed in the amended Statement of Claim (Order 20 rule 5(5)).
26. It has been said that whether the new cause of action arose out of the same or substantially the same facts is “a matter of impression” (see Welsh Development Agency [1994] 1 WLR 1409 at 1418D per Glidewell LJ). In Paragon Finance , however, Millett LJ observed at 418 that this might be so in borderline cases. In other cases it must be a matter of analysis.
27. I do not read these judgments as laying down any mechanical rule whereby one has first of all to decide whether a case is “borderline” and then decide the question by (i) impression (if “borderline”) or (ii) analysis (if not “borderline”). In my view these judgments simply set out a common sense approach (and in Paragon at 418g-h Millett LJ expressly referred to and agreed with the first instance judge’s application of common sense). It is not possible to judicially “legislate” for all types of new causes of action that the Courts will have to consider. There will invariably be a spectrum of possibilities. Some will obviously involve (or not involve) substantially the same facts; some less so. The question will have to be addressed on a case by case basis.
28. It has been observed that the words in Order 20 rule 5(5) are not to be narrowly construed and that they should be given a broad and liberal interpretation in order to attain the objective of the rules: Leung Kin Fook v Eastern Worldwide Co. Ltd. (No.2) [1997] 1 HKC 524 at 528C-D per Litton VP (as he then was).
29. In that case the defendant hired a barge from the plaintiff and the barge was lost during the period of hire. The original claim pleaded a claim in bailment. The formulation of the claim in bailment rendered it unnecessary for the plaintiff to plead facts as to how the loss occurred. The proposed amendments concerned the additional of claims in breach of contract and tort, and included the additional of factual averments as to how the loss occurred.
30. The first instance judge held that the causes of action in contract and tort were new causes of action. This was held, on appeal, to be correct. The first instance judge then considered the factual averments (relating to the new causes of action) and held that “the new causes of action [did] not arise from the facts of the original cause of action”. On this, the Court of Appeal held that the judge erred in focusing attention on the additional facts which the plaintiff needed to make to establish the new causes of action and that he applied the provisions of Order 20 rule 5(5) too narrowly. The absence of a complete overlap of facts did not take the case out of Order 20 rule 5(5).
31. In my view it must be right that in order for a new cause of action to fall within Order 20 rule 5(5), the material facts supporting that new cause of action need not be identical to, or the same as, or be a “complete overlap with”, those supporting the originally pleaded cause of action. This is clear from the wording of Order 20 rule 5(5) itself, in that the sub-rule expressly recognized the possibility that an amendment to add a new cause of action could arise out of substantially the same facts (i.e. facts which are not “the same” but only “substantially the same”) as the cause of action originally pleaded.
32. Thus the originally pleaded cause of action may rely on material facts A, B and C. The new cause of action may rely on material facts A, B, C and D (or A, B and D). The additional of new fact D (or the substitution of new fact D for old fact C) does not necessarily mean that the facts are not substantially the same. It depends (among other things) on the nature of the causes of action concerned (see, e.g. Millett LJ in Paragon at 418g-h) and the nature and importance of the new facts averred. There can be no hard and fast rule.
33. It is true that the new and old contractual causes of action arise out of the same background of an attempt to develop land comprised in Lot 539. But that, as I said, is mere background . When one analyzes the material facts underlying the causes of action, the original cause of action was based on “the 2nd agreement” made in May 1993 arising out of the meeting in early 1993; the new cause of action was based on the Collateral Agreement made in August 1996 in a restaurant in Yuen Long. The individuals making the “Collateral Agreement” (in the proposed re-amendment) were (i) one Mr. Kan “and/or” Mr. Lee Kin Cheong on behalf of the Plaintiff and (ii) Mr. Lee Hang Kwong and Mr. Lee Kwai Wo on behalf of the 2nd to 4th Defendants “and/or” members of the Tso. These names were not pleaded at all in the amended Statement of Claim. In my view, the new cause of action based on the Collateral Agreement is not one arising out of substantially the same facts as the cause of action originally pleaded. The time and contents are not the same and the parties/ individuals concluding them are not the same.
34. My conclusion is therefore that is so far as the proposed re-amendments involved the introduction of a new cause of action in contract, it does not arise out of the same or substantially the same facts as the contractual cause of action pleaded in the amended Statement of Claim. The case does not fall within Order 20 rule 5(5) and hence leave will be refused.
35. That leaves the other new cause of action based on the inherent right of a landowner (as a result of the assignment in May 1993 (paragraphs 16 and 17 of the proposed re-amendments). I cannot find any trace of this in the amended Statement of Claim and this is a new cause of action.
36. Though this is a new cause of action, the fact of the assignment had been pleaded in paragraph 13(b) of the amended Statement of Claim. It is true that the amended Statement of Claim did not go on to plead the conclusion which the Plaintiff now seeks to derive out of the assignment, namely that “After the Plaintiff became the registered owner of [Lot 539 RP], at all times, the Plaintiff and/or its assigns or successors have all the right or interest to use, occupy or enjoy [Lot 539 RP]” (paragraph 17 of the proposed re-amendment). However, that is more in the nature of a legal conclusion. Even if it were to be regarded as the addition of a new material fact, I am of the view that the cause of action based on the inherent right of a landowner arises out of substantially the same facts as a cause of action pleaded in the amended Statement of Claim. Leave will therefore be given to plead that new cause of action.
37. At the hearing Miss Chan, on behalf of the 5th to 10th Defendants, expressed concern that the reference to “an agreement made in or about May 1993 …” in paragraph 16 of the proposed re-amendment might be relied on by the Plaintiff as giving rise to some sort of additional contractual cause of action. Upon my clarification with Mr. Hung (for the Plaintiff), he informed me that it was not the intention of the Plaintiff to rely on the content of any such “agreement” (such as “It was agreed on this date between the Plaintiff and the Defendants that the Plaintiff would be allowed to build six houses on Lot 539 RP …”). Miss Chan had indicated to me that she was content for paragraphs 16 and 17 (of the proposed re-amendments) to remain as long as the reference to the agreement was excised. I shall deal with this at the end of this judgment when I indicate the extent to which leave is granted.
38. I should add that both the amended Statement of Claim and the proposed re-amendments contained an averment that the 12 indigenous villagers need not come from the same village (paragraph 10(a) of the amended Statement of Claim; paragraph 7 of the proposed re-amendments). As I understand it, Miss Chan was not opposing the inclusion of paragraph 7 of the proposed re-amendments. As a matter of completeness I would add that paragraph 7 of the proposed re-amendments, insofar as it sets out a “right” of the Plaintiff to insist that the 12 indigenous villagers need not come from the same village (and prayer (1) of the proposed re-amendments in effect seek a declaration of such an entitlement), is arguably a new cause of action. The basis of this entitlement is different from that pleaded in the amended Statement of Claim: in the amended Statement of Claim this entitlement is pleaded as arising from the “2nd agreement” (as then defined); in the re-amended Statement of Claim this entitlement is said to arise as a matter of construction of the Deed. That said, I am of the view that this cause of action arose out of the same or substantially the same facts as a cause of action pleaded in the amended Statement of Claim. It is based on construction of the Deed, and the Deed was pleaded as part of the cause of action relied on in the amended Statement of Claim (it was there defined as “the agreement”).
39. There are other parts of the proposed re-amendments which are not objected to. Again I shall deal with these at the end of this judgment when I indicate the extent to which leave is granted.
40. Given my decision above, it is technically unnecessary for me to deal with the question of prejudice. Nonetheless, as a matter of completeness (and in case this matter proceeds further) I would set out my view on this point.
41. I do not accept Miss Chan’s submissions on “prejudice”.
42. Miss Chan’s submissions, as I understand from her skeleton arguments, are based on her interpretation of paragraph 22 of the proposed re-amendments. In her skeleton arguments she seemed to be under the impression that the Plaintiff had pleaded, in paragraph 22 of the proposed re-amendments, that there was an agreement between the Plaintiff and the Defendant in March 1997 as to the building of six houses on Lot 539 RP.
43. However, as can be seen from the extracts of the proposed re-amendments set out above, paragraph 22 pleaded nothing of that sort. It may be that Miss Chan’s skeleton arguments were based on the proposed re-amendments as they stood before the Master. Without going into details, the proposed re-amendments before the Master contained a paragraph 23 which is differently worded from the current paragraph 23 and is capable of suggesting that the “Collateral Agreement” was concluded in about March 1997.
44. Be that as it may, on the basis that paragraph 22 of the proposed re-amendments pleaded an agreement in March 1997 between the Plaintiff and the Defendants about building six houses on Lot 539 RP, Miss Chan submitted that the 5th to 10th Defendants would be prejudiced because it would now be difficult to track down the directors of the Plaintiff as at March 1997 as they were all mainlanders.
45. The first point to note is that the “Collateral Agreement” is now pleaded as having been made, not as part of the agreement pleaded in paragraph 22, but as having been made in August 1996. The underlying premise of Miss Chan’s argument is therefore a false one.
46. In any event, I find this argument on “prejudice” contrived and unreal. It is not said that witnesses on the Defendants’ side cannot be tracked down or are suffering from fading memories. It is said that the 5th to 10th Defendants wished to track down the Plaintiff’s witnesses. If anything, one would be expecting the Plaintiff (not the 5th to 10th Defendants) to call their then-directors to support the Plaintiff’s case. If these directors cannot now be tracked down and cannot be called, then the likelihood is that the Plaintiff would be prejudiced, not the 5th to 10th Defendants. If the Plaintiff tracks them down and calls them, then the 5th to 10th Defendants will not be prejudiced because they will be able to cross examine them (rather than having to call them as the 5th to 10th Defendants’ own witness and be bound by their testimony ). It cannot be sensibly suggested that the 5th to 10th Defendants wished to call them for the purpose of turning them into hostile witnesses.
47. It is of course possible that a party may know (or at least have reason to believe) that a witness who is at first sight a “natural witness” for the other side (say, an employee or director of the other side) in fact has useful evidence to give against the other side and would be prepared to do so. But there is no suggestion or evidence that this is the case here.
48. In any event there is no evidence that had the matter been pleaded from day one (i.e. at the time of the issuance of the Writ in February 1998) the 5th to 10th Defendants would have been able (or would have found it easier) to track down the directors of the Plaintiff as of March 1997. If these directors had all gone back to China upon Mr. Kan’s taking over of the Plaintiff in May 1997 then it may well be that even as of the date of Writ these directors had already become untraceable. One just does not know and one cannot speculate when they might have become untraceable. The burden is on the 5th to 10th Defendants to adduce evidence of prejudice caused by the late amendment . They had not done so.
49. In oral submissions before me there was a faint attempt to suggest that it was a form of prejudice for a weak claim to hang over the heads of the 5th to 10th Defendants for such a long time. I have great doubts as to whether the “claim hanging over one’s head” type of prejudice (which is a type of prejudice developed in the context of striking-out for want of prosecution and mainly directed at claims involving serious allegations against professionals) can be prayed in aid of in the context of resisting an amendment under Order 20 rule 5(5). The relevant type of prejudice in the Order 20 rule 5(5) context, I am inclined to think, is prejudice flowing from having to deal with the newly introduced plea such as evidential difficulties and the like.
50. It is not necessary to decide whether this form of prejudice is in principle applicable in the present context. There is simply no evidence as to the sort of anxiety that these Defendants had been placed under, or what adverse effect the claim has had on the lives or business of these individuals.
51. I therefore reject Miss Chan’s submission about this type of prejudice on the basis of insufficiency of evidence.
52. The order I shall make in relation to the appeal against the granting of leave to re-amend the Statement of Claim is therefore as follows:-
(1)
Paragraphs 1 to 3 (inclusive) of the Master’s Order dated 15th May 2006 shall be set aside.
(2)
Leave be granted to re-amend the Statement of Claim limited as follows (references to paragraph numbers are references to numbered paragraphs in the proposed re-amended Statement of Claim to which re-amendments are made):-
(a)
Paragraphs 1 to 15 – leave granted.
(b)
Paragraph 16 – Leave granted but with the deletion of the words from “By an agreement …” up to and including the words “at the price of $190,000”.
(c)
Paragraphs 18 to 22 – leave granted.
(d)
Paragraphs 23 and 24 – leave refused.
(e)
Paragraph 25 – leave granted subject to deletion of the reference to “and/or the Collateral Agreement”.
(f)
Paragraph 26 – leave granted subject to deletion of the references to the Collateral Agreement and the Composite Agreement.
(g)
Paragraph 27 – leave granted subject to deletion of references to the Collateral Agreement and the Composite Agreement. I note in this connection that Miss Chan had, at the hearing before me, objected to paragraphs 27(2) and 27(3) on the basis that the acts pleaded therein were pleaded to be “upon” the Collateral Agreement and Composite Agreement being entered into. However, the opening words of paragraph 27 included a reference to “the 2nd agreement” as well and “the 2nd agreement” (as now defined) is a concept that remains in the re-amended Statement of Claim. In any event the subject matter of paragraphs 27(2) and 27(3) are arguably referable to the argument (which I allowed to be pleaded) that the Plaintiff as owner of Lot 539 RP had an inherent right to use and occupy that land.
(h)
Paragraphs 28 and 29 – leave granted.
(i)
Paragraph 31 – leave granted subject to the addition of the words “in breach of the obligation pleaded in paragraph 25 above” in substitution for the words “in breach of contract”.
(j)
Paragraph 33 – leave granted subject to the same condition as applicable to paragraph 31.
(k)
Paragraph 34 – leave granted.
(l)
Prayer (1) – leave granted.
(m)
Prayer (2) – leave granted with the deletion of references to the Collateral Agreement and the Composite Agreement.
(n)
Service of the re-amended Statement of Claim be effected within 2 day of my Order (the summons asked for service be dispensed with, but since I have refused leave on a number of paragraphs I think there should be service of the re-amended Statement of Claim in its re-typed form).
(o)
Leave be granted to the 5th to 10th Defendants to re-amend their amended Defence (if so advised) within 14 days of service of the re-amended Statement of Claim.
(p)
I shall deal with costs after I had dealt with the appeal on discovery.
Discovery
53. I now turn to the appeal against the Master’s order refusing discovery.
54. The discovery application has to be adjudicated on the basis of the Statement of Claim in the re-amended form as indicated above. Technically speaking, since discovery turns on issues raised by the pleadings, one will not really know what issues will be disputed on the re-amended Statement of Claim until the 5th to 10th Defendants had effected the consequential amendments to their amended Defence. However, the consequence of awaiting to see the 5th to 10th Defendants’ re-amendments would be to adjourn the discovery appeal until such time as the re-amended Defence has been filed. That would be wholly undesirable in terms of time and costs. Neither Mr. Hung nor Miss Chan had invited me to take this course.
55. I shall therefore proceed on the basis that the 5th to 10th Defendant’s case in response to the re-amended Statement of Claim will be broadly the same as that reflected in their amended Defence and they would be disputing the Plaintiff’s entitlement to build six houses on Lot 539 RP.
56. The documents of which discovery is sought are set out in a Schedule to the 5th to 10th Defendants’ summons for discovery dated 21st July 2005. I set out the Schedule below.
“ Index to the Schedule
The 9 Villagers: means the 9 Villagers referred to in paragraph 5(a) of the affirmation of Liu Kwok Chi Nelson affirmed herein on July 2005 (“the Affirmation”)
The 12 Villagers means the 12 Villagers referred to in paragraph 5(b) of the Affirmation.
The 6 Villagers: means the 6 Villagers referred to in paragraph 11 of the Affirmation.
The 12 Houses: means the 12 Houses referred to in paragraph 5(a), (b) and (c) of the Affirmation.
The 6 Houses: means the 6 Houses referred to in paragraph 11 of the Affirmation.
SCHEDULE
Under the Deed The 6 Villagers
(a)
Agreements between the Plaintiff and the 9 Villagers
(h)
Agreements between the Plaintiff and the 6 Villagers
(b)
Powers of Attorney executed by the 9 Villagers to the Plaintiff
(i)
Powers of Attorney executed by the 6 Villagers to the Plaintiff
(c)
Wills executed by the 9 Villagers
(j)
Wills executed by the 6 Villagers
(d)
Undertakings executed by the 9 Villagers
(k)
Undertakings executed by the 6 Villagers
(e)
Applications submitted by the 9 Villagers to District Office Yuen Long for the purpose of obtaining building licences as referred to in paragraph 19(e) of the Affirmation
(l)
Applications submitted by the 6 Villagers to District Office Yuen Long for the purpose of obtaining building licences as referred to in paragraphs 19(f) and 20 of the Affirmation
(f)
Applications submitted by the Plaintiff to the District Office Yuen Long in respect of the 12 Houses including covering letter and supporting documents as referred to in paragraph 19(f) of the Affirmation
(m)
Application submitted by the Plaintiff to District Office Yuen Long in respect of the 6 Houses including covering letter and supporting documents as referred to in paragraph 19(f) of the Affirmation
(g)
Applications submitted by the Plaintiff to the Buildings Department regarding the 12 Houses including covering letter and supporting documents as referred to in paragraph 19(f) of the Affirmation
(n)
Application submitted by the Plaintiff to the Building Department in respect of the 6 Houses, including covering letter and supporting documents as referred to in paragraphs 19(f) and 20 of the Affirmation
”
57. In relation to the documents concerning the applications submitted by the Plaintiff, Miss Chan submitted (in her skeleton arguments) that these would be relevant to damages (for costs wasted) to be awarded to the Plaintiff as a result of the obstruction caused by the 5th to 10th Defendants, as pleaded in paragraph 18 of the re-amended Statement of Claim.
58. It is not apparent from paragraph 18 of the re-amended Statement of Claim that the acts pleaded (and complained of) in that paragraph are intended by the Plaintiff as grounding any claim for damages. The only plea of damages is contained in paragraph 33 and that paragraph, as modified by my order granting leave to re-amend, relied on the breach of the obligations pleaded in paragraph 25. Paragraph 18 is not intended to serve as particulars of the breach of those “paragraph 25 obligations”. I therefore find it difficult to see how Miss Chan can “construct” a line of relevance by reference to paragraph 18 of the re-amended Statement of Claim.
59. More importantly, paragraph 33 of the re-amended Statement of Claim does not contain any particulars of loss and damage. Had that paragraph been introduced by way of re-amendment I would have refused leave, alternatively insisted on provision of proper particulars as a condition on which leave is to be given. But that paragraph (and the damages plea) had been there from day one. No attempt had been made to obtain Further and Better Particulars of that paragraph. Nor had the Plaintiff given any Particulars of Damage. On the basis of the pleading, therefore, one cannot see how the Plaintiff will seek to quantify its claim for damages and whether the documents asked for would be relevant to the damages claim. On the basis of that pleading, the Plaintiff will not be allowed to adduce any evidence of loss.
60. Miss Chan submitted that sometimes some judges had been “lenient” to a plaintiff in assessing its damages claim (perhaps in allowing oral evidence to be given “on the spot” without pleaded particulars and without prior discovery of documents) and she wanted to see the documents (relating to damages) now. I have difficulties in following this argument. One must proceed on the basis that all courts deal with cases on the basis of the pleadings and evidence before them. I do not think I can legitimately proceed on the basis of how a party’s legal advisors perceive to be the way some judges had in the past “leniently” dealt with the evidence and pleadings before them on the facts of some other case. As far as this case is concerned the position is, in my view, quite straightforward:-
(1)
Damages had not yet been particularized. As a matter of civil procedure (and I record that Mr. Hung has expressly accepted before me) if the Plaintiff does not provide particulars of damages, the Plaintiff would not be able to adduce any evidence of loss at trial.
(2)
If the 5th to 10th Defendants are genuinely concerned to evaluate and examine the state of the Plaintiff’s documentary evidence in relation to the damages claim, there is nothing to prevent them from seeking Further and Better Particulars of paragraph 33. They had not done so. Once such particulars are given the 5th to 10th Defendants can then see precisely what sort of documents would be relevant to the Plaintiff’s claim. Any discovery issue can be ventilated then . The 5th to 10th Defendants are now guessing.
61. As things now stand, there is no properly pleaded issue on damages on the pleadings. The question of discovery of documents going to damages therefore cannot arise. I reject this line of relevance.
62. Then it is said that as part of the 5th to 10th Defendants’ case, they had pleaded (at paragraph 6 of the amended Defence) that members of the Tso resolved at the meeting in early 1993 that the Tso would only allow 12 houses to be built and that Lot 539 RP should be used as a common area for the construction of a playground, garden and for use as a car parking area, and that the Plaintiff agreed to all these. It is said by Miss Chan that the Plaintiff had supplied members of the Tso with certain draft plans showing development of Lot 539 RP into tennis court, playground and parking spaces. It is contended that these plans, if produced in court, would show that throughout the entire “contractual period” (words used in Miss Chan’s skeleton) the Tso had agreed that only 12 houses could be built with attending recreational facilities to be built on Lot 539 RP.
63. The problem with this argument is that the “plans” allegedly given by the Plaintiff to members of the Tso (these were mentioned in a letter dated 26th August 1997 from the 5th to 10th Defendants’ solicitors to the Plaintiff’s then solicitors) were simply not included in the Schedule to the discovery summons. The documents listed in the Schedule all specifically related to applications in connection with the construction of houses by the 12 and 6 villagers. There is no evidence that in any of the papers supposedly submitted by the villagers (or submitted by the Plaintiff) in connection with the construction of the 12 houses (and they were to build their houses on Lot 539 A-L), there had to be any draft plan or plans as to how Lot 539 RP (i.e. the land on which the 12 villagers were not going to build on) was to be used. And by the time applications came to be submitted by the 6 villagers for building on Lot 539 RP (or, more accurately, on six of the sections into which Lot 539 RP was later further sub-divided namely Lot 539M, N, P, Q, R and S), those applications would relate to the building of houses by these 6 villagers on those plots of land.
64. Therefore, on the basis of the Schedule as presently formulated, discovery (and any consequential production) of the documents listed therein will not provide the 5th to 10th Defendants with the documents they wanted.
65. It is a matter for the 5th to 10th Defendants to decide how they should formulate their discovery request to obtain what they want. It is not the purpose of this judgment to discuss whether or how that could be done. Suffice it for me to say that on the basis of the Schedule as presently formulated and on the basis of the supporting evidence as presented by the 5th to 10th Defendants in supporting of their discovery application I am not satisfied that the documents sought are relevant along the lines suggested by Miss Chan.
66. Lastly Miss Chan argued that the applications for building licences by the villagers were referred to in the re-amended Statement of Claim and hence under Order 24 rule 10 they were entitled to call for the production of the applications for building licences.
67. Reference to a document in one party’s pleading only confers an entitlement on the opponent to serve a notice under Order 24 rule 10 calling for the production of that document. It is still open to the party (who makes reference to that document in its pleading) to refuse to comply with the Order 24 rule 10 notice. If the notice is not complied with, then the matter falls to be decided in the context of an application for production made under Order 24 rule 11(1) (the 5th to 10th Defendants’ summons in fact referred to Order 24 rule 10(1) in the marginal note, but I am prepared to treat it as meaning Order 24 rule 11(1), which is really consequential upon service of an Order 24 rule 10(1) notice).
68. Under Order 24 rule 13, no order for the production of any documents for inspection shall be made under (among others) Order 24 rule 11(1) unless the Court is of the opinion that the order is necessary either for disposing fairly of the cause of matter of for saving costs.
69. For reasons I had explained above I fail to see the relevance of the documents listed in the Schedule (and that included the applications for building licences). It is true that the applications were mentioned in the Plaintiff’s re-amended Statement of Claim. However, if a fact is an immaterial averment to start with (in the sense that it is not a material fact necessary to constitute a cause of action) then the fact that it is pleaded by one party and then denied (or not admitted) by the other does not turn that into a material or relevant averment for the purpose of discovery (see Allington Investments Corp & others v First Pacific Bancshares Holdings Ltd. & another [1995] 2 HKC 139; Paul’s Model Art GmbH & Co. Kg v U T Ltd & others (CACV No.139 of 2005 at paragraph 25 per Cheung JA).
70. I have heard no submissions and seen no evidence which persuaded me that production of the applications for building licences (being the only documents mentioned in the Schedule that had been referred to in the re-amended Statement of Claim) satisfies the requirements of Order 24 rule 13. In my discretion I refuse the application under Order 24 rule 10 & 11.
71. I do not think that Miss Chan had pressed her Order 24 rule 10 & 11 application in relation to the other documents listed in the Schedule (the 5th to 10th Defendants’ summons for discovery did not separately identify which documents were sought under Order 24 rules 10& 11). In case I were wrong and Miss Chan is in fact pursuing an Order 24 rule 10 & 11 application for all
72. It follows that I will dismiss the 5th to 10th Defendants’ appeal against the Master’s order refusing to order discovery. Paragraph 4 of the Master’s Order dated 15th May 2006 will therefore be affirmed.
Costs
73. In relation to costs, the 5th to 10th Defendants had succeeded substantially in their appeal relating to the re-amendment but failed completely in their appeal in relation to discovery. The costs order made by the Master was on the basis that the Plaintiff succeeded on both amendment and discovery. That has obviously to be revisited as a result of this appeal.
74. One possibility would be to “carve up” the costs by reference to subject matter, in other words there would be one cost order relating to discovery (whereby the 5th to 10th Defendants will be the paying party) and one costs order relating to re-amendment (under which the Plaintiff will be the paying party). That would be unsatisfactory because it would involve two sets of taxation (or two gross sum assessments, if that route is adopted). More time and costs will be incurred.
75. I propose to adopt a broad brush approach and make an order in the exercise of my discretion that there be no order as to costs both here and below, on the basis that the costs order obtained by the 5th to 10th Defendants on re-amendment (both here and below) would probably balance out the costs order obtained by the Plaintiff on discovery (both here and below).
76. I appreciate that this is rough and ready and that there can always be room for argument that costs incurred by the parties on the two summonses issues are not necessarily identical or of the same order of magnitude. I have taken this into account. But I have also taken into account the time spent on argument on both issues (which was more or less the same before me) and the need to avoid further interlocutory skirmishes (such as arguments on taxation or gross sum assessments).
77. My costs order is therefore, on a nisi basis, as follows:
(1)
Paragraphs 5 to 7 of the Master’s order dated 15th May 2006 be set aside.
(2)
There be no order as to costs for both summons and for this appeal.
78. Paragraph 8 of the Master’s order shall stand.
(Paul Shieh SC)
Mr Andy Hung, instructed by Messrs Pansy Leung Tang & Chua, for the Plaintiff
Ms Winnie Chan, instructed by Messrs Clarence Wong, Cheung & Liu, for the 5th – 10th Defendants