KUAN HENG CHOI v. MA PUI TUNG t/a JOSIP MA & CO.

HCA 19578/1998

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

ACTION NO. 19578 OF 1998

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R U L I N G

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1. This morning, in the course of cross-examination of the Plaintiff, Defence counsel wished to ask her about contribution to the payment of legal costs in the sum of $90,000 odd paid to the vendor in the High Court action in which the vendor sued the Plaintiff for damages due to her failure to complete.

2. When asked about the relevance of this question, Ms Cheng for the Defendant submitted that she would argue that the Plaintiff did not suffer loss as to the whole of that sum because there were contributions from others, namely Chan Yuk Mui and Chan Hing. She indicated that the defence took the point that in respect of these contributions, they were not loss suffered by the Plaintiff and hence the Plaintiff could not recover the same even if the Plaintiff succeeded on the question of liability. Ms Cheng also indicated that she would take the same point with regard to the other heads of damages claimed by the Plaintiff.

3. Mr.Chan for the Plaintiff objected to this line of defence because it was not pleaded in the Amended Defence.

4. In the pleadings, the Defendant admitted that various sums were paid (see paras. 18 to 20 of the Amended Defence). That did not include the legal costs of $90,000. However, the plea that the Plaintiff suffered these as loss and damages (in Paragraph 24 of the Re-re-re-amended Statement of Claim) is not admitted (see Paragraph 38 of the Amended Defence). Ms Cheng argued that since the defence had put the Plaintiff to prove that such loss and damages were suffered by the Plaintiff, this entitled her to run the line of defence as indicated above.

5. Since this would have a bearing on the evidence to be led and the scope of cross-examination to be allowed, parties agreed that it is appropriate for me to rule on this at this stage despite the evidence has not been closed. I agree that it is unsatisfactory if parties go on with the trial without knowing the scope of the dispute and in the special circumstances of this case, I agree to rule on the point, which is basically a pleading point.

6. Mr Chan's point is simply this: as required by Order 18 rule 8(1), the Defendant is required to plead specifically this line of defence because otherwise the Plaintiff would be taken by surprise and new issues of facts would be raised. He said he was taken by surprise, not so much as to the fact that there were some other parties behind the Plaintiff in these transactions, but as to the fact that this point was being taken by the defence. If the matters were pleaded in the Defence, Mr Chan said the Plaintiff would have considered the joining of other parties as co-plaintiffs, lawyers would have to investigate the exact arrangements between the Plaintiff and these persons and the legal consequences flowing therefrom, further evidence would have been prepared to deal with these matters. Without such specific pleas in the Defence, Mr Chan said that the Plaintiff was quite entitled to take it that the Defendant did not intend to take this line of defence and it might be for the reason that the Defendant thought that this was of no avail to them. I should mention that hints about the Plaintiff being supported by other persons in the transaction in question could be detected from witness statements as well as documents in court bundles.

7. Ms Cheng on the other hand argued that she was merely testing the Plaintiff's case as to quantum. She said although payment of the various sums were admitted by the Defendant, there was no admission that those were loss and damages suffered by the Plaintiff. She said the Plaintiff was not taken by surprise because she should know about these arrangements. They knew that they had to prove loss and the Defendant was only challenging the quantum put forward by the Plaintiff instead of raising any collateral issues.

8. The rules of pleadings as to damages have undergone changes. There has been a trend to apply the same rules on liability as well as quantum. In the old days, Order 18 Rule 13(4) provided that allegation about damage being suffered and amount thereof was deemed to be traversed. Even so, in the case of Speidel v. Plato Films [1961] AC 1090 at p.1104 and 1105, the English Court of Appeal held that new issues of facts pertaining to question of damages should not be raised without pleadings (see also McGregor on Damages, 14th Edn., Para.1512). I cannot see any distinction between issues of facts touching upon quantum and issues of facts touching upon questions like mitigation or remoteness. Pleading serves to inform the other side what case he has to meet. There is no reason why the rule should be different with regard to quantum.

9. By SI 2427 of 1989 (which took effect on 4th June 1990), the English rules were amended. Firstly, Order 18 Rule 12(1)(c) were introduced into the rules. Secondly Order 18 Rule 13(4) were amended by deleting the reference to the amount of damages. Hence, the deemed traverse ceased to apply to the amount of damages. According to Para.18/12/1 of the 1991 White Book, one of the purpose of the widening of the rules was to make the pleading more informative as to damages.

10. By SI 2671 of 1991, the English rules were further amended. Order 18 Rule 13(4) was revoked altogether.

11. In Hong Kong, Order 18 Rule 12(1)(c) was added by LN 404 of 1991. Order 18 Rule 13(4) was repealed by LN 403 of 1992.

12. The purpose of all these changes were to prevent a party from being taken by surprise in respect of question of damages. In my judgment, the matters which the Defendant now seeks to rely upon are matters which would take the Plaintiff by surprise. Whilst the Plaintiff herself might have introduced the question of those supporting her in the transaction by way of background, neither she nor her legal adviser could have envisaged that by a non-admission and the general traverse, the Defendant intended to argue at the trial that those were not losses suffered by her because they were funded by someone else.

13. In 1963, the Court of Appeal had this to say in Weait v. Jayanbee Joinery [1963] 1 QB 239 at p.247-248 cited at Para.2050 McGregor on Damages, 16th Edn.,

"from a practical point of view ... if a defendant were minded to take a substantial point as this on damages ... it would be essential that, if not by pleading, at any rate by notice, the plaintiff and his advisors should be made aware that such a point was going to be taken."

14. With the amendments of the rules, I am of the view that our system of pleadings have reached the position where a substantial point such as the one argued by Ms Cheng in this case is to be taken, it has to be pleaded.

15. I therefore rule that without proper pleadings, the point is not open to the Defendant.