TIN SHUI WAI DEVELOPMENT LTD v. ATTORNEY GENERAL

[Particulars of a traverse of a negative allegation will not be ordered unless the traverse conceals an affirmative case]

Construction List 1987, No. 5

IN THE SUPREME COURT OF HONG KONG

HIGH COURT

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BETWEEN

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JUDGMENT

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1. This is an application by the plaintiff in this action, made by summons issued on 13th May 1991 under Order 18, rule 12(3) of the Rules of the Supreme Court, asking for particulars in the form of a statement of the nature of the defendant's case "in relation to the policies and procedures adopted by the Government, with full particulars of the policies and procedures relied on, the dates between which they were in operation and indicating how it is alleged such affected the provision of funds and staff for the Tin Shui Wai project".

2. In order to explain this, I must say something about the action itself.

3. The plaintiff is a company called Tin Shui Wai Development Limited, a wholly-owned subsidiary of another company called Mightycity Limited. The defendant is the Attorney-General, representing the interests of the Hong Kong Government. The plaintiff's claim in the action is a claim against the Hong Kong Government to be compensated for the loss it says it has suffered because of alleged failures by the Hong Kong Government in the performance of the latter's obligations to the plaintiff under or in connection with an agreement constituted between the Hong Kong Government and the plaintiff on the terms of a letter dated 29th July 1982 (the July 1982 Agreement) addressed by the Hong Kong Government to the plaintiff and to its parent company. The July 1982 Agreement looks forward to the formation and development of an initial development zone of 169 hectares of land at Tin Shui Wai (in the northwest New Territories) of which 38.8 hectares were to be granted to the plaintiff.

4. Clause 15 of the July 1982 Agreement provides as follows :-

"15.    The Government and, by their acceptance of this offer, Mightycity and TSW acknowledge and declare that it is their unwavering intention that the package agreement herein described for the development of the 169 hectares (including the 38.8 hectares) will be fully accomplished, and the parties hereto accordingly further declare that they will, at all times until the development is accomplished, use their respective best endeavours in a spirit of continuing and constructive co-operation to facilitate that development in timely fashion."

5. The issues in the action are complicated; and I do not wish to over-simplify them or any of them. But I believe it can safely be said that one of the issues in the action is whether the Government did or did not use its best endeavours to facilitate the development in timely fashion. The resolution of this issue requires or may require the court to consider what, on its true construction in the context of the July 1982 Agreement, the expression "best  endeavours" means; what standard of performance was required of the Government; and whether it achieved that standard.

6. On this issue, the plaintiff says that the Government failed to achieve the standard of performance properly to be expected of it, and so is in breach of contract. The defendant denies this; and says that the Government did achieve that standard, so that it is not in breach of contract.

7. It is for present purposes essential to notice that what we have here is a negative allegation made by the  plaintiff and traversed by the defendant. Such a traverse necessarily involves a double negative; but, although, in ordinary parlance, a double negative must involve an affirmative proposition, for pleading purposes the denial of a negative allegation does not necessarily involve the making of an affirmative proposition. Whether it does so or not depends on whether it is, on the one hand, a mere traverse; or, on the other hand, a traverse which, though negative in form, is in fact pregnant with an affirmative. The denial of a negative allegation may operate as a bare traverse and no more, whereby the defendant simply puts the plaintiff to the proof of the negative alleged. In such a case, if it is not possible to read into the mere denial of the negative allegation any affirmative allegation beyond that which is necessarily implied from such a traverse, particulars will not be ordered; but then once the plaintiff establishes a prima facie case, the defendant will be precluded from setting up an affirmative case in answer, for that would be to allow him to set up a case which he has not pleaded. Alternatively, if it is clear to the court, either from the nature of the case or from what is stated by counsel or otherwise, that the defendant intends to set up an affirmative case, which, if established, would defeat the plaintiff's prima facie case, particulars of such an affirmative case will be ordered; for otherwise there will be doubt as to what are the issues to be determined between the parties. where the denial of a negative allegation leaves it in doubt as to what the  true nature of the denial is, the pleading will be regarded as embarrassing and evasive and it will be ordered to be struck out, or amended, or particulars may be ordered of any affirmative case relied on. (All these matters are usefully summarised in Jacob & Goldrein, Pleadings : Principles and Practice, 1990, at pp.129, 130, from which I have drawn much of what is set out above.) I have thought it necessary to restate these principles, and to do so at this stage of this judgment, because their proper application seems to me to afford the answer to the problem with which the court is faced on the plaintiff's present application.

8. The trial of the action is now under way before me; indeed, the plaintiff has closed its case, and had done so before it issued this summons. In the course of the trial I have received much evidence as to the policies and procedures adopted by the Government which affected or may have affected the provision of funds and staff for the Tin Shui Wai project. This evidence, as it has appeared to me, has not disclosed any attempt on the part of the defendant to set up an affirmative case in answer to the plaintiff's negative allegation. The defendant has denied that allegation. His denial, in my judgment, operates as a bare traverse and no more, whereby the defendant has put the plaintiff to the proof of the negative alleged. Both the plaintiff, and the defendant, as it seems to me, are entitled to lead whatever evidence they like about the policies and procedures adopted by the Government, indicating how (if at all) it is alleged such affected the provision of funds and staff for the Tin Shui Wai project. The plaintiff is entitled to lead evidence as to what those policies and procedures were with a view to showing that those policies and procedures adversely affected  the provision of funds and staff for the Tin Shui Wai project, and thereby proving that the Government failed to use its best endeavours to facilitate the development in timely fashion. The defendant is entitled to lead evidence of what those policies and procedures were with a view to showing that they did not so adversely affect the provision of funds and staff for the Tin Shui Wai project as to preclude the defendant from establishing its case that it did use its best endeavours to facilitate the development in timely fashion.

9. The defendant's case on this issue is, in my judgment, in no sense pregnant with an affirmative of which the defendant ought to be ordered to give particulars. The grounds relied on in support of this application are, in fact, only some interlocutory observations of a general nature made by Mr Derek Wood, Q.C., for the defendant about the defendant's case, observations which in my judgment in no way detract from the clarity of the issue as it appears from the pleadings, that is to say, whether or not the defendant did or did not use its best endeavours to facilitate the development in timely fashion. The nature of the defendant's case on this aspect of the issue seems to me to be perfectly clear; the defendant's case is simply that the policies and procedures which were adopted by the Government did not adversely affect the provision of funds and staff for the Tin Shui Wai project, at any rate, not to the extent that would leave the defendant open to the reproach that it failed to use its best endeavours to facilitate the development in timely fashion. This does not involve the assertion of an affirmative case beyond what is necessarily involved in the defendant's traverse of the plaintiff's negative allegation. The defendant makes no suggestion to the effect that even if the Government did fail to use its best endeavours to facilitate the development in timely fashion, it can rely on its own policies or procedures to escape the consequences. Ms. Gladys Li, Q.C. for the plaintiff accepted, when I put the point to her in the course of the argument, that the plaintiff's application was made on the basis that the Government's case was an affirmative one going beyond a bare traverse of the pliantiff's negative allegation. My conclusion that the Government's case does not do so is fatal to the application.

10. The application came on before me on Friday, 17th May 1991. At the conclusion of the argument I indicated that I proposed to dismiss it, but that, since the application raised a pleading point of some importance, I would put my judgment into writing. This is that judgment, which I deliver in open court. I propose to dismiss the application with costs; but I will hear counsel for the plaintiff, at a date and time to be fixed for the purpose, if it is desired to attempt to persuade me to do otherwise.