BLOCKCHAIN GROUP COMPANY LTD (FORMERLY PING SHAN TEA GROUP LTD AND HUAFENG GROUP HOLDINGS LTD) (IN LIQUIDATION) v. PKF HONG KONG LTD (FORMERLY PKF (A FIRM))

HCA 297/2022

[2024] HKCFI 903

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

ACTION NO 297 OF 2022

____________________

BETWEEN

____________________

_________________

DECISION

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1.  This is the Plaintiff’s appeal from Master Frances Lok’s dismissal on 19 September 2023 of its application by summons filed on 12 June 2023 (“the Summons”) to amend the name of the current Defendant from “PKF Hong Kong Limited (formerly PKF (a firm))” to “PKF (a firm)”.

Background facts

2.  PKF (a firm) is an accounting firm organised as a partnership and registered in 1976. It acted as the Plaintiff’s auditor until 9 May 2017.

3.  PKF Hong Kong Limited (“PKF Ltd”) is a limited company incorporated in January 2017. It replaced PKF (a firm) as the Plaintiff’s auditor after 9 May 2017.

4.  Lai Kar Yan Derek and Yip Wa Ming Ben (“Mr Yip”) of Deloitte Touche Tohmatsu (“the Liquidators”) were appointed liquidators of the Plaintiff on 4 June 2019.

5.  The Plaintiff (acting through the Liquidators) issued the writ on 22 March 2022 making claims in respect of

(1) auditing work for the Plaintiff’s audited financial statements for the financial year 2015 and the provision of an auditor’s report dated 30 March 2016 (“the 2015 auditor’s report”); and

(2) auditing work for the Plaintiff’s interim financial report for the 6 months ended 30 June 2016 (“the 2016 interim report”).

6.  The writ named “PKF Hong Kong Limited (formerly PKF (a firm)” as Defendant.

7.  The Plaintiff seeks

(i) to amend the name of the Defendant from “PKF Hong Kong Limited (formerly PKF (a firm))” to “PKF (a firm)” pursuant to RHC O 20, r 5 (3) (“the amendment application”);

(ii) alternatively, to substitute “PKF (a firm)” as the Defendant in place of “PKF Hong Kong Limited (formerly PKF (a firm)” pursuant to RHC O 15 r 6 (“the substitution application”); and

(iii) to extend the validity of the writ (as amended) (“the extension application”).

8.  PKF Ltd and PKF (a firm) opposed the application. Their stance is that the description of the Defendant named in the writ was intended to identify PKF Ltd as the Defendant, albeit there was a mistake that PKF Ltd was somehow “formerly PKF (a firm)”.

9.  At stake are the causes of action the Plaintiff has initiated. It must succeed on either the amendment application or the substitution application. Otherwise, those claims would be barred by limitation.

I. The amendment application

A. Applicable principles

10.  RHC O 20 governs applications to amend. Rules 5(2) to (3) provides as follows:

“5. Amendment of writ or pleading with leave (O. 20, r. 5)

…

(2) Where an application to the Court for leave to make the amendment mentioned in paragraph (3), (4) or (5) is made after any relevant period of limitation current at the date of issue of the writ has expired, the Court may nevertheless grant such leave in the circumstances mentioned in that paragraph if it thinks it just to do so.

(3) An amendment to correct the name of a party may be allowed under paragraph (2) notwithstanding that it is alleged that the effect of the amendment will be to substitute a new party if the Court is satisfied that the mistake sought to be corrected was a genuine mistake and was not misleading or such as to cause any reasonable doubt as to the identity of the person intending to sue or, as the case may be, intended to be sued.”

11.  Those provisions need to be read together with Section 35 of the Limitation Ordinance (Cap 347) (“LO”) that governs the bringing of new claims after the expiry of the limitation period. For present purposes, the following are pertinent:

“(5) Rules of court may provide for allowing a new claim to which subsection (3) applies to be made as there mentioned, but only if the conditions specified in subsection (6) are satisfied, and subject to any further restrictions the rules may impose.

(6) The conditions referred to in subsection (5) are—

…

(b) in the case of a claim involving a new party, if the addition or substitution of the new party is necessary for the determination of the original action.

(7) The addition or substitution of a new party shall not be regarded for the purposes of subsection (6)(b) as necessary for the determination of the original action unless either—

(a) the new party is substituted for a party whose name was given in any claim made in the original action in mistake for the new party’s name;”

12.  Therefore, for O 20 r 5 (3) to apply, the court must be satisfied that

(1) there was a genuine mistake in naming the plaintiff or the defendant;

(2) the mistake was not misleading;

(3) the mistake was not such as to cause any reasonable doubt as to the identity of the person intending to sue or intended to be sued; and

(4) it would be just to allow the amendment:

see International Bulk Shipping and Services Ltd v Minerals and Metals Trading Corp of India [1996] 1 All ER 1017, 1025j-126a.

13.  The first requirement is not satisfied unless the mistake is one of name. The mistake has to be a mistake as to the name rather than the identity of the party or as to legal rights[1]: see per Tang PJ in Beijing Tong Gang Da Sheng Trade Co Ltd v Allen & Overy (A Firm) (2016) 19 HKCFAR 705 at §43.

14.  The distinction between an error of identification and an error of nomenclature is often fine. Case law contains various expressions of the distinction derived from the circumstances of the particular case which serve as useful points of reference.

15.  In the Beijing case (at §§44-45), Tang PJ cited from Adelson v Associated Newspapers Limited [2008] 1 WLR 585 where Lord Phillips CJ considered that under O 20 r 5:

[31] … The mistake envisaged in relation to the name of the claimant is one under which the name used for the claimant is not the name of the person wishing to sue …

[33] … the mistake that the rule envisages is one of nomenclature, not of identification …

[29] … An error of identification occurs where a claimant identifies an individual person who has caused him any injury, intends to sue that person, describes him in the proceedings by the correct name, but then discovers that he has identified the wrong person as the person who has injured him. An error of nomenclature occurs where the claimant identifies the correct person as having caused him the injury, but describes him in the pleadings by the wrong name.

16.  Another expression of the distinction is to be found in the judgment of Leggatt J (as he then was) in Insight Group Limited v Kingston Smith [2014] 1 WLR 1448 where a claim for damages for professional negligence had been mistakenly brought against an LLP rather than the partnership whose business the LLP took over[2].

17.  At §57, Leggatt J stated that in that scenario there are 2 possible types of mistakes:

“[1] The claimant sues the LLP in the mistaken belief that the LLP provided services which are said to have been performed negligently, failing to recognise that the services were provided by the former partnership and not the LLP.

[2] The claimant knows that the services were provided by the former partnership but mistakenly believes that the LLP is legally liable for the negligence of the earlier firm.

[3] The court has power to grant relief in case (1) but not in case (2).”

18.  In determining into which category a particular case falls, the whole of the evidence must be considered to explain why the LLP, and not the firm, was named as the defendant. At §58, Leggatt J elaborated on the evidence as follows:

“ 58 … Such evidence will of course include any explanation given by the person who was responsible for preparing the claim form. But any such explanation may well not be conclusive, not least because the person responsible for the mistake may have given no proper thought to the decision to name the LLP as the defendant and may not consciously have followed either of the possible thought processes distinguished above. Any explanation given of the nature of the mistake may thus be an attempt to rationalise what was done in hindsight. For that reason other, objective evidence is likely to be just as, if not more, important. If particulars of claim were prepared when the claim was issued or at any rate before the mistake was recognised, they may be the best source for inferring what the claimant intended. It is also potentially relevant to consider what was said in any correspondence which preceded the issue of the claim form and in subsequent correspondence in so far as it sheds light on what the reason was for naming the LLP as the defendant.”

19.  It is common ground that subsequent cases such as American Leisure Group Limited v Olswang LLP[3] [2015] PNLR 21 and Jenkins v JCP Solicitors Ltd[4] [2019] PNLR 21 applied the Insight Group analysis.

20.  A genuine mistake is not limited to mistakes without fault: The Sardinia Sulcis and Al Tawwab [1991] 1 Lloyd’s Rep 201 at p 206 col 1 citing Russell LJ’s statement in Mitchell v Harris Engineering Co Ltd [1967] 2 QB 703 at 721.

B. The Plaintiff’s case

21.  Mr Manzoni SC, senior counsel for the Plaintiff, focused on 3 matters in support of his submission that the mistake is one of nomenclature. They are (1) pre-writ correspondence; (2) the indorsement of claim; and (3) the Plaintiff’s affirmations.

22.  By letter addressed to PKF Ltd as auditor of the Plaintiff and its subsidiaries (“the Group”) dated 31 July 2019 (“the July 2019 request”), the Liquidators requested PKF Ltd to provide internal documents and working papers for the financial years for the period from 30 September 2012 to 31 December 2017. Further letters were sent on 15 November 2021 and 12 January 2022.

23.  Mr Manzoni highlighted the Liquidators’ use of the words “you” when addressing PKF Ltd and describing the working papers sought as “your [working papers]”. He submitted that it reflects the Liquidators’ belief and understanding that PKF Ltd is in some way the auditor from 2012 to 2017 and they are looking to recover the papers from the auditor that did those audits.

24.  Due to the reorganisation of PKF (a firm) into PKF Ltd on 9 May 2017, PKF Ltd replaced PKF (a firm) as the Plaintiff’s auditor. It obtained possession[5] of PKF (a firm)’s working papers and internal documents for the earlier audits. When PKF Ltd received the July 2019 request, it still was the Plaintiff’s auditor and remained as such until January 2020 when the Plaintiff appointed a different firm as its auditor.

25.  Despite the reorganisation, there was considerable overlap between the current shareholders and directors of PKF Ltd and the partners of PKF (a firm) at the time of the 2015 audit.

26.  In PKF Ltd’s reply of 25 January 2022[6], when it informed the Liquidators that the engagement partners for the audits resigned[7] to join the firm that the Plaintiff engaged as its new auditor in January 2020, it referred to the resignation as being from “our firm”. The Plaintiff considered that by so doing, PKF Ltd is effectively saying that it was the service provider in 2015. On that basis, the Plaintiff submitted that, objectively, both the Liquidators and PKF Ltd considered that PKF Ltd and PKF (a firm) are one and the same.

27.  The writ of summons is dated 22 March 2022. The Plaintiff invited attention to the indorsement itself to ascertain who the intended defendant of the claims is. The relief sought is for

“breach of contract, breach of duty (contractual, tortious, equitable, fiduciary, statutory, regulatory or other duties), misrepresentation, negligence by, and/or unjust enrichment of the Defendant in connection with or arising out of but not limited to [inter alia, the audit of the Group] for the year ended 31 December 2015 …

28.  The entity against whom such relief is sought can only be the party to the contract or an assignee. Equally, the entity owing such a duty to the Plaintiff can only be the provider of the services that are the subject of the claim. It is common ground that PKF (a firm) provided such services.

29.  The Plaintiff submitted that nothing in the writ points to PKF Ltd, except for the name. Because there is a mistake in the name, one cannot look at the mistake to say that was the intention.

30.  The Plaintiff’s evidence consists of 2 affirmations filed by Mr Yip dated 9 June 2023 (“Yip 1^st”) and 6 September 2023 (“Yip 2^nd”) respectively. Yip 1^st explained[8] that

(1) the Liquidators issued the writ (which concerns the Plaintiff’s claim for negligence in respect of the 2015 audit) on 22 March 2022 on a protective basis; §14

(2) the Plaintiff always intended for PKF (a firm) to be the Defendant. However, the Plaintiff under a genuine mistake believed that PKF Ltd “is and was the successor entity” to PKF (a firm); §7

(3) at the time the writ was issued, the Liquidators genuinely believe that PKF Limited was “the successor entity” to PKF (a firm): §16

(4) on 22 March 2023 the Plaintiff became aware that PKF (a firm) is still in existence and holds a current business registration certificate through a business registration certificate search conducted by the Plaintiff’s solicitors; §17

31.  Yip 2^nd stated that

(1) the Plaintiff had a mistaken belief at the time it issued the writ that PKF Ltd was “the successor entity” to PKF (a firm); §7

(2) the Plaintiff had genuinely but mistakenly believed that PKF Ltd was “the successor entity” to PKF (a firm) and that PKF (a firm) was no longer in existence; §10

(3) the SEHK announcement dated 9 May 2017 of PKF (a firm)’s retirement as auditor of the Plaintiff was “due to reorganisation of PKF (a firm) to PKF Ltd”; §13

32.  Although the Plaintiff was intending to sue PKF (a firm), the services provider, it did not know until 22 March 2023 (which is post-writ) that PKF (a firm) continued to exist. Mr Yip’s evidence is that the prior to that date, it was the Plaintiff’s understanding that PKF (a firm) had ceased to exist.

33.  The Plaintiff was unable to respond to the Court’s question as to how it reached that understanding except to state that it is a mistake and one cannot apply logical tests to a mistake. Mr Manzoni submitted that the question is what Mr Yip meant when he said PKF (a firm) does not exist and thought that PKF Ltd had taken over. He further submitted that prior to the writ, both parties[9] were working on the assumption that the services provider was in some way PKF Ltd, that PKF (a firm) had somehow transformed itself to PKF Ltd.

34.  The Plaintiff submitted that when all the evidence is viewed objectively, it is clear that the Plaintiff was intending to sue the professional services firm that conducted the negligent audit. The mistake was one of name and the amendment should be allowed.

35.  Mr Keith Lam, counsel for PKF Ltd and PKF (a firm), submitted that to come within O 20 r 5 (3), there must be a mistake of a qualifying nature, i.e. a mistake as to the name as opposed to a mistake of identity or legal right[10]. One is therefore concerned with the nature of the mistake.

36.  The writ, being the document contemporaneous with the mistake, is the most important piece of evidence. While Mr Manzoni focused almost exclusively indorsement of claim, brushing aside the description of the Defendant that appears on the first page of the writ because it contained a mistake, Mr Lam submitted that the description of the Defendant - PKF Ltd (formerly PKF (a firm)) - which is an integral part of the evidence, is important.

37.  The description identifies both ‘Ltd’ and ‘firm’. It does not say that they are the same entity. In applying this description, the Liquidators must have thought that that the 2 names refer to 2 different entities. Given their professional background, they could not have thought that a limited company and a firm could be the same thing. Mr Lam submitted that the description suggests that there was no mistake that they were the same entities.

38.  Relevantly,

(1) there are copious references in Yip 1^st and 2^nd to the Liquidators being under a genuine mistake that PKF Ltd was “the successor entity” of PKF (a firm): §30(2) and (3) and §31(1) and (2) above. They show that the Liquidators thought that PKF Ltd and PKF (a firm) were 2 different entities since it makes no sense to say one succeeding another if they were one and the same;

(2) in Yip 2^nd[11], the Plaintiff added that it had a mistaken belief that “PKF (a firm) was no longer in existence” and that but for that mistaken belief, the Plaintiff would have sued PKF (a firm) as the Intended Party;

(3) the Plaintiff also stated[12] that it had a mistaken belief that “[PKF Ltd] succeeded PKF (a firm) and took over its business and properties, including the audit work papers”. If so, it must have known that PKF (a firm) and not PKF Ltd was the entity that handled the audit work identified in the writ;

(4) there is no evidence suggesting that the Liquidators thought that PKF (a firm) and PKF Ltd were and remained the same entity;

(5) moreover, the fact that the Liquidators referred[13] to the public announcement of the change of auditor on 9 May 2017 due to the reorganisation of PKF (a firm) to PKF Limited, must mean that they were aware of the change.

39.  Mr Lam submitted that the writ has to be read in its entirety with the description which identifies both entities. The Liquidators were aware that PKF (a firm) was the auditor that conducted the relevant audit. Nevertheless, they did not sue PKF (a firm). Instead, they sued PKF Ltd, describing it as “(formerly PKF (a firm))”.

40.  The writ does not state that the Plaintiff was suing the auditor of the 2015 audit. It only stated that the claim is “in connection with or arising out of” inter alia, the 2015 audit. It was suing PKF Ltd while also describing PKF Ltd as being “formerly PKF (a firm)”. The description used is equally consistent with a claim against an entity which has taken over the liability of the actual auditor.

41.  The Plaintiff named PKF Ltd as the defendant because it thought PKF (a firm) ceased to exist and that PKF Ltd was the successor entity. The description of the defendant in the writ that the plaintiff actually applied was “the successor entity of the entity which made the 2015 Audit Report”.

42.  This was the wrong description and is not a mistake as to the name.

43.  As regards the pre-writ correspondence where the Liquidators appeared to have assumed that PKF Ltd was the auditor for the relevant years, that is contrary to the description the writ and the Liquidators’ evidence that they knew that PKF (a firm) was the auditor.

44.  Mr Lam submitted that for this reason the Plaintiff could not rely on the pre-writ correspondence to take it within the Insight Group line of cases[14]. All those cases involved the plaintiff mistakenly thinking that it was the LLP or Ltd, the successor entity that was the services provider, not realising that there was a previous partnership.

45.  The present case is factually different because the Liquidators realised that it was PKF (a firm) and not PKF Ltd that conducted the audits in question.

46.  On the question as to the “identity of the person intended to be sued”, in his judgment in The “Sardinia Sulcis” and “Al Tawwab” [1991] 1 Lloyd’s Rep 201 at 207 col 1, Lloyd LJ explained the proper approach in these terms:

“In one sense a plaintiff always intends to sue the person who is liable for the wrong which he has suffered. But the test cannot be as wide as that. Otherwise there could never be any doubt as to the person intended to be sued, and leave to amend would always be given. So there must be some narrower test. In Mitchell v. Harris Engineering the identity of the person intended to be sued was the plaintiff's employers. In Evans v. Charrington it was the current landlord. In Thistle Hotels v. McAlpine the identity of the person intending to sue was the proprietor of the hotel. In The Joanna Borchard it was the cargo owner or consignee. In all these cases it was possible to identify the intending plaintiff or intended defendant by reference to a description which was more or less specific to the particular case. Thus if, in the case of an intended defendant, the plaintiff gets the right description but the wrong name, there is unlikely to be any doubt as to the identity of the person intended to be sued. But if he gets the wrong description, it will be otherwise. (Italics added)

47.  For the reasons set out by Lloyd LJ in the italicized part of the passage cited above, the Plaintiff’s approach, focusing largely (if not exclusively) on the indorsement of claim to identify the person intended to be sued for the wrong suffered, is too wide a test and cannot be correct.

48.  The description of the intended defendant is critical. In the present case, the correct description is simply the entity that provided the relevant audit service. However, that is not the actual description applied. The Liquidators were suing PKF Ltd while also describing it as “formerly PKF (a firm)”. The description is clearly wrong and applying the Sardinia Sulcis test, this is not a case where there is unlikely to be any doubt as to the identity of the person intended to be sued but a case where the plaintiff gets the wrong description.

49.  Mr Manzoni cautioned that as the Liquidators’ evidence is ex post facto, one should approach it with care, relying on Leggatt J’s observations[15] in Insight Group that ex post facto accounts “may well not be conclusive” given that “the person responsible for the mistake may have given no proper thought to the decision to name [the wrong defendant]”.

50.  That, however, is not the position in the present case because the description itself, referring to two different entities, shows that some thought was given to differentiating between them. The Liquidators’ evidence sheds light on their reason for choosing the description used.

51.  One reaches the same result by applying the Insight Group test[16]. On the facts, the present case falls squarely within the 2^nd category with the consequence that the Court has no power to grant relief.

C. Conclusion

52.  In my view, PKF Ltd and PKF (a firm) have convincingly countered the 3 matters on which the Plaintiff relies in support of the amendment application. It follows that the amendment application must fail.

(II) Extension of validity of the writ

53.  This application is only relevant if the amendment application is allowed. Given my conclusion above, it does not arise for consideration.

(III) The substitution application

54.  The substitution application is an alternative to the amendment application. It is a new point not raised before the Master.

A. Relevant provisions

55.  In pertinent part, O 15 r 6 provides as follows:

“Order 15 Causes of Action, Counterclaims and Parties

6. Misjoinder and nonjoinder of parties (O. 15, r. 6)

…

(5) No person shall be added or substituted as a party after the expiry of any relevant period of limitation unless either—

(a) the relevant period was current at the date when proceedings were commenced and it is necessary for the determination of the action that the new party should be added, or substituted; or

…

(6) The addition or substitution of a new party shall be treated as necessary for the purposes of paragraph (5)(a) if, and only if, the Court is satisfied that—

…

(e) the new party is sued jointly with the defendant and is not also liable severally with him and failure to join the new party might render the claim unenforceable.” (Italics added)

56.  Those provisions need to be read together with Sections 35 (6) (b) and 35 (7) (b)[17] of the LO set out in §11 above and, for ease of reference, are replicated in footnote 17 below.

B. The proper construction of O 15 r 6(5)(a) and r 6(6)(e)

57.  The meaning of “if, and only if” in rule 6(6) was contentious. Mr Manzoni submitted that the current position is set out in Chan King Leung Willy v Wo Ming Engineering Limited [2021] HKCFI 951. In that case, Chu J referred to the defendant’s submission[18] that the words “if, and only if” in rule 6(6) exhaustively defined all the situations where joinder or substitution of parties shall be treated as necessary for the purposes of rule 6(5)(a).

58.  At §55, the judge disagreed with the defendant’s submission that rule 6(6) be narrowly interpreted in a restricted manner so as not to cause undue injustice[19]. After accepting the plaintiff’s submissions in relation paragraphs (a), (c) and (d) of rule 6(6), she stated that

“[s]ub-paragraphs (6)(a) to (e) thereunder should be construed purposively and in my view the provisions relate to both addition and substitution of parties”.

59.  Mr Lam highlighted the fact that

(i) the Chan case was concerned with rule 6(6)(a) and not rule 6(6)(e);

(ii) the effect of rule 6(6)(e) was not at issue; and

(iii) the Chan Court was not referred to §§5.16-5.29 of the Law Reform Committee’s 21^st Report (Final Report on Limitation of Actions) (1977) (Cmnd 6923) (“the Report”) which discusses the situation of making amendments to add a new party after the expiration of the limitation period.

60.  The Report provides the legislative history behind rules 6 (5) and (6):

(i) those rules were enacted to give effect to the requirements in sections 35 (6) (b) and 35 (7) (b) of the LO;

(ii) however, r 6(6) is more restrictive than section 37(7)(b) of the LO[20]; and

(iii) the 5 exhaustive scenarios identified in r 6(6) were to give effect to the recommendation made in the Report.

61.  Those matters are echoed in The Choko Star [1996] 1 WLR 774 where Mance J considered the legislative history of the rules 6 (5) and (6)[21] at 779H-791D.

62.  The following paragraphs of the Report have particular relevance in light of the interpretation the Plaintiff advocates:

(1) §5.17 considers the situation where the plaintiff makes an error of law or procedure but the correction of which would not take one by surprise. An example given was that the plaintiff is one of 2 or more persons who have a joint right of action, and a person entitled jointly with him may be a necessary party to the action and cannot be joined after the limitation period has expired.

(2) §5.18 considers similar situations where the joinder relates to the defendant which was regarded as “the more difficult” because to allow a joinder would deprive the defendant of a limitation defence. The Report considered that one class of joinder of defendants should be permitted i.e. in the case of joint obligations[22];

(3) §5.20 stated that the Committee has identified 5 cases in which a new party should be added by way of amendment post limitation[23]; and

(4) §§5.22-5.25 discussed how these exceptions (i.e. situations where post limitation joinders or substitution should be permitted) should be given effect. Of the available options to extend the rule-making power, the option recommended and adopted[24] was to allow rules of court power to

“cover … only specific cases falling within a formula embodied in the primary legislation” (emphasis original).

63.  Mr Lam submitted that it is clear from this that the intention here is not only that the 5 specific cases are intended to be the situations covered in rule 6(6), but also that no other case should be allowed except those identified in the rules.

64.  For this reason it was submitted that rule 6(6) is intended to cover only situations where the new defendant is joined or substituted where it was under a joint but not several liability with the original defendant.

65.  The Plaintiff disagrees. Its case is that the Report only deals with ‘addition’, not with ‘substitution’ (citing Irwin v Lynch [2011] 1 WLR 1364 at §18[25]) and is therefore inapplicable or has no relevance.

66.  Mr Manzoni submitted that rule 6(6)(e) must be construed purposively, citing the Chan case at §55. In the context of substitution, he submitted that

(1) the reference to the new party being sued “jointly” with the existing party cannot refer only to a joint liability because it would make no sense, as the original party would cease to be a party upon substitution. Accordingly, that part of the sentence can only be referring to the addition of a party, but not to a substitution;

(2) the reference to the new party “not also being severally liable” with the original party does not apply to a substitution. That is because the original party has no liability for the underlying claim at all and hence this part of the rule satisfied; and

(3) “render[ing] the claim unenforceable” must be a reference to the same test as in §35(7)(b) of the LO and should be broadly construed.

On its proper construction, substitution is permitted, subject to the discretion of the Court.

67.  Apart from the matters set out at §59(i) and (ii) above, one cannot discern from a closer reading of §§56 to 58 of the Chan case, any statement or suggestion that the party seeking substitution does not have to satisfy one of the categories under rule 6(6).

68.  Turning to the Report, the relevance of the legislative history of rules 6 (5) and (6) is evident from The Choko Star [1996] 1 WLR 774 at 779H-791D. The matters highlighted in §59 above are reflected in the judgment of Mance J who considered the legislative history of the rules 6 (5) and (6). Not only are the 5 specific situations exhaustive, they apply whether what is sought is an addition or a substitution[26].

69.  The Plaintiff sought to derive assistance from the UK equivalent of O 15 r 6(6)(e) and section 37(7)(b) of the LO, namely, r 19.6(3)(b)[27] of the UK Civil Procedure Rules (“CPR”)[28] and §35(6)(b) of the UK Limitation Act 1980[29]. In Irwin v Lynch and Insight Group, the UK Courts adopted a wide construction for those provisions. The Plaintiff urged this Court to adopt the same approach.

70.  Mr Lam submitted that the UK position does not assist because the scope of O 15 r 6 (6)(e) is different and more restrictive than the current English position is under CPR r 19.6(3)(b). The current CPR r 19.6(3)(b) is in essentially the same terms as section 35(7)(b) of the LO but O 15 r 6(6) is more restrictive than section 35(7)(b) of the LO.

71.  As Lloyd LJ noted in Irwin v Lynch, the then CPR r 19.5(3)(b) “are now not in the same form as they were under the Rules of the Supreme Court[30]”. Hence, the Court need not construe the current CPR rules by reference to the Report or the authorities under the previous rules[31]. CPR r 19.5(3)(a) which is in similar terms to O 20 r 5 should be construed in accordance with the jurisprudence under O 20 r 5.

72.  In Winland Mortgage Limited v Star Rainbow Investments Limited [2020] HKCFI 3163, a case concerning O 15 r 6(6)(a) and (b), the Court noted (at §113(4)) that the provision in CPR r 19.5 is very different from current Hong Kong rules and Irwin v Lynch did not assist.

73.  The Plaintiff’s construction urged upon the Court (at §66 (2) and (3) above) involves ignoring the words “issued jointly with the defendant” in the case of a substitution, while also keeping “not also being severally liable”. That is not a permissible application of the purposive approach of statutory construction.

74.  A purposive approach does not entitle one to distort or ignore the plain meaning of the text and construe the statute in whatever manner that achieves a result which is considered desirable: see China Field Limited v Appeal Tribunal (Buildings) (No 2) (2009) 12 HKCFAR 342 at §36.

C. Conclusion

75.  I do not find the Plaintiff’s submissions convincing. The construction urged upon the Court is not a purposive construction.

76.  I agree with Mr Lam’s construction of O 15 r 6(5)(a) and r 6(6)(e).

77.  As the Plaintiff cannot demonstrate that it is within one of the 5 specific categories rule 6(6), the substitution application must fail.

III. Order

78.  The appeal is dismissed.

79.  I make an order nisi of costs in favour of the Defendant and the Respondent with certificate for counsel, such costs to be summarily assessed and payable forthwith.