ASSET CHOICE GROUP LTD AND ANOTHER v. ONBOARD TECHNOLOGY LTD AND ANOTHER

HCA3215/2002

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

ACTION NO.3215 OF 2002

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D E C I S I O N

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1. This is an appeal by the plaintiffs against a master's decision dated 8 September 2003 by which leave to re-amend the Statement of Claim was refused. By a later summons the plaintiffs also apply for leave to file a 2nd affirmation which purports to explain why the amendments are required in this particular case and why the nature of the plaintiffs' case appears to have changed.

Background

2. As the matter has developed it has become somewhat involved and complex. I shall attempt to reduce it to its barest outline. The case concerns alleged agreements for the sale of shares from the defendant company to the plaintiffs. A total of three different agreements have been pleaded.

3. In the original Statement of Claim all three agreements were alleged to have been made by the 1st plaintiff, a corporation. On 20 December 2002 the defendants therefore issued a summons to strike out the 2nd plaintiff as a party.

4. The plaintiffs then applied to amend the Statement of Claim in such a way as to make the 2nd plaintiff a proper party to one or more of the agreements. The learned master granted leave to amend and dismissed the strike-out summons. That decision was appealed successfully. The learned judge made the following order :

"	(1)	the present appeal be allowed;
	(2)	the orders of the learned Master be set aside;
	(3)	the Plaintiffs' summons dated 5 March 2003 be dismissed with costs to be paid by the Plaintiffs to the Defendants forthwith, with a certificate for counsel for the hearing before the learned Master;
	(4)	the claim of the 2nd Plaintiff be struck out and the title of the action be amended accordingly, provided that this part of the order shall not take effect until after the expiry of 14 days from the date this judgment is handed down, or the determination of a fresh application (if any) to amend taken out by the Plaintiffs within the said 14-day period, whichever is the later;
	(5)	regardless of any such fresh application to amend and the outcome thereof, the costs of the Defendants' summons dated 20 December 2002 be paid by the Plaintiffs to the Defendants forthwith with a certificate for counsel in respect of the hearing before the learned Master;
	(6)	for the avoidance of doubt, nothing in this order shall prevent the Plaintiffs from making a fresh application to amend the Statement of Claim whether within or without the aforesaid 14-day period (or an application for joinder of party)."

5. Accordingly the plaintiffs issued a further summons to amend. That summons was dismissed and that dismissal is now appealed.

6. The defendants opposed the summons before the learned master on the basis that the amendments had not been properly or exactly formulated. In addition, on appeal, they submit that the affirmation (which was not before the learned master) which purports to explain the amendments and explain the true nature of the plaintiffs' case does not do so.

7. Mr Kenneth Kwok SC, counsel for the defendants, correctly analyses the present position as follows.

8. In the plaintiffs' draft amendments the following changes are made :

(a)	the 2nd agreement is now made by the 2nd plaintiff (i.e. a person) alone, the 1st plaintiff is not involved at all;
(b)	the 2nd agreement is now said to be partly oral;
(c)	it is alleged that the non-corporate parties (the 2nd plaintiff and 2nd defendant) were to procure the corporate parties (the 1st plaintiff and 1st defendant) to vary the 1st agreement;
(d)	the 3rd agreement is deleted; and
(e)	specific performance of both agreements is pleaded in the prayer.

9. Mr Kwok also complains, again correctly, that the submissions advanced before the learned master were not consistent with the draft amendments (as per the plaintiffs' written submissions).

10. Finally, before this court, further written submissions were provided, and advanced by Mr Jimmy Kwong for the plaintiffs, as follows :

"The prayer is amended and there is no confusion: P2 is claiming for the sale by D2 of 77,000,000 of the shares of the Company, accepting the obligation to cause P1 to agree to the variation of the 1st contract, viz., P2 would procure P1 to demand from the D1 only the sale of 214,000,000 shares of the Company in the event of D2 honouring his agreement with P2.

If the claims of P2 does not succeed (therefore there is no obligation for P2 to procure and P1 to accept any variation of the first contract, i.e. purchasing a lesser number of shares), P1 shall be claiming against D1 for the performance of the 1st contract, i.e. the sale of 317,000,000 of the shares of the Company."

11. Mr Kwok submits that if this is indeed the correct version then the draft amendments have not been properly or exactly formulated and should be refused.

12. I agree. Without going into the merits and the individual criticisms of inconsistency between the original pleading, the first amendment, the present draft amendment, the written submissions before the learned master and the present submissions, suffice it to say that the position described by A. Cheung DJ in his decision on the first appeal from a master that "the amendments are not sufficiently intelligible" has got worse rather than better.

13. I agree that were the amendments to be allowed it would be an exceptional case where an affidavit in support, explaining the new case, should also be filed. The plaintiffs' attempt to do so is by way of a half page affirmation from the 2nd plaintiff dated 14 October 2003. It is inadequate.

14. Broadly speaking, in correspondence prior to the pleadings it was the corporate parties who were the parties to the agreements. The original Statement of Claim maintained this position. By the first amendment non-corporate parties were pleaded in the alternative. The final position is that the non-corporate parties have taken the leading role and the 3rd agreement has been abandoned.

15. Taken overall, this is not a situation to which the defendants should be required to plead a defence.

16. I am not persuaded that the learned master fell into error when he dismissed this summons. Neither am I persuaded that leave should be granted to file an affirmation which fails to explain or remedy the confused state of the plaintiffs' case.

17. I dismiss this appeal and refuse leave to file Tong Chi Keung's 2nd affirmation. I further make a costs order nisi in the defendants' favour for the costs of and occasioned by this appeal.