TASTY CATERING GROUP LTD AND ANOTHER v. CHENG HUNG KIT AND OTHERS

CACV 573/2020

[2022] HKCA 853

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF APPEAL

CIVIL APPEAL NO 573 OF 2020

(ON APPEAL FROM HCA NO 1130 OF 2011 AND HCA NO 1137 OF 2011 (CONSOLIDATED))

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(by Original Action)

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(by Counterclaim)

(Consolidated by the Order of the Honourable Mr Justice L Chan dated 16 December 2014)

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J U D G M E N T

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Hon Kwan Ag CJHC (giving the Judgment of the Court):

1.  This is an application for leave to appeal to the Court of Final Appeal against our judgment on 23 August 2021 (“CA Judgment”; [2021] HKCA 1211). The Notice of Motion was issued on 20 September 2021. Save as otherwise stated, we will adopt the terms and expressions in the CA Judgment.

2.  Having considered the submissions in writing of all relevant parties lodged pursuant to Practice Direction 2.1 para 3, we think it appropriate to deal with this application on paper and proceed to do so.

The CA Judgment

3.  By the CA Judgement, we dismissed P1’s appeal and upheld the decision of Linda Chan J handed down on 23 September 2020 (“Decision”), whereby it was ordered, inter alia, that:

(1)  the counterclaim of P1 to P4 as against D13 made in the D&CC be struck out;

(2)  the action of P1 to P4 as against D13 be dismissed; and

(3)  the Amendment Summons of P1 to P4 to amend the D&CC be dismissed.

4.  We agreed with the judge that the amendments proposed by P1 by way of the Amendment Summons against D1, D2 and D13 were plainly unsustainable and the action by P1 to P4 against D13 ought to be dismissed. Our reasons, in summary, were that:

(1)  As against D13, the counterclaim as originally pleaded by P1 to P4 against D13 is demurrable on the basis that no relief was pleaded against D13 in the existing D&CC (see §10 of the CA Judgment).

(2)  As for the proposed amendments against D13, they are similarly unsustainable because (a) P1’s proposed claim for damages is said to arise out of D13’s alleged participation in duress, and it is established that conduct amounting to duress does not per se give rise to an actionable claim in damages (see §§11 to 14 of the CA Judgment); and (b) even if duress per se constitutes an actionable tort, P1 has no reasonably arguable case that he has suffered any loss by reason of such duress (see §§15 to 16 of the CA Judgment).

(3)  As against D1 and D2, P1’s proposed amendments relating to the resolutions passed at the August EGM and the allotment of shares concern a cause of action which arose only after the commencement date of the counterclaim. Thus, notwithstanding that the courts in recent times have been disposed to adopt an approach more flexible than the Eshelby rule[1], the judge was clearly entitled in the exercise of her discretion to disallow the proposed amendments on the basis that such cause of action only accrued post-writ, bearing in mind also the prejudice that D1 and D2 may suffer in being deprived of the limitation defence if the new claim were to be introduced (see §§24 and 25 of the CA Judgment).

(4)  Further, the August EGM is not mentioned anywhere in the D&CC. As such, P1’s proposed claim cannot be said to arise out of the same facts or substantially the same facts as a cause of action in respect of which relief has already been claimed. The new claim, which is time-barred, does not comply with the requirements of Order 20 rule 5(5) of the Rules of the High Court and section 35(6) of the Limitation Ordinance, Cap 347 (see §26 of the CA Judgment).

The Notice of Motion

5.  In the Notice of Notion filed by P1 (who acts in person throughout) on 20 September 2021 for leave to appeal, P1 formulates the following two questions as questions of law of great general or public importance:

(1)  “Whether the Eshelby principle (followed in Wing Siu Co. Ltd v. Goldquest International Ltd [2003] 2 HKC 64 at [18]) is still good law in Hong Kong?” (“Question 1”); and

(2)  “What is the true test for the requirements of ‘arising out of the same or substantially the same facts as already relied upon’ for the purpose of amendments to pleadings whereas the question of limitation was purportedly raised or alleged against the amendments?” (“Question 2”).

6.  It is apparent that these questions only pertain to this court’s ruling vis-à-vis D1 and D2. P1 did not identify any question of great general or public importance that is applicable to D13.

7.  P1 also seeks leave to appeal on the ‘or otherwise’ limb, contending that the Court of Final Appeal should intervene because substantial and grave injustice would be done if the misconduct and wrongdoings involved are swept under the carpet on artificial and technical grounds and not permitted to go to trial.

Question 1

8.  In his written submissions dated 4 October 2021, P1 makes an assertion that D13 (his former legal adviser) had defrauded him in collusion with D1 and D2. P1 then submits that by reason of such matters, Questions 1 and 2 “plainly arise” as questions of law of great general or public importance and are reasonably arguable.

9.  We do not accept these submissions.

10.  First of all, the ruling vis-à-vis D13 did not engage the Eshelby rule, which is the subject of Question 1. The fact that fraud is alleged against D13 is of no relevance to this question.

11.  Further, as is clear from the CA Judgment, neither this court in the CA Judgment nor the judge below in the Decision had applied the Eshelby rule strictly.

12.  Insofar as P1 is suggesting that the Eshelby rule is not even a relevant factor which the court may properly take into consideration in the exercise of its discretion whether to allow an amendment to plead post-writ matters, such contention is not reasonably arguable and is contrary to the weight of authorities referred to at §24 of the CA Judgment. P1 does not provide any reasoned argument to support the view that the Eshelby rule should be an entirely irrelevant consideration.

13.  There is no basis for suggesting that Question 1 is an appropriate question to be submitted to the Court of Final Appeal for determination.

Questions 2

14.  As for Question 2, it is not clear what P1 is suggesting should be the “true test for the requirements of ‘arising out of the same or substantially the same facts as already relied upon’ ”, or how the “true test”, if applied, may affect the judgment under appeal.

15.  In any event, the principles concerning the requirements of Order 20 rule 4(5) and section 35(6) of the Limitation Ordinance are well settled. There is no good reason why the well-settled principles should be revisited by the Court of Final Appeal.

16.  At §7 of P1’s written submissions in reply dated 15 October 2021, P1 submits that the unlawful allotment at the August EGM was an act which followed “4 months after the first unlawful allotment” at the April EGM. It appears to be his contention that given that the April EGM was already under challenge in the Consolidated Action, the proposed amendments relating to the August EGM must arise out of the same facts or substantially the same facts as a cause of action in respect of which relief has already been claimed and are thus not time-barred.

17.  This is essentially a re-run of the argument that P1 raised unsuccessfully before the judge and on appeal[2]. Consistently with §26 of the CA Judgment, we are of the firm view that the expression “arising out of the same or substantially the same facts” cannot be understood in the amorphous sense that P1 suggests. Besides, whether a cause of action may be said to arise out of the same or substantially the same facts is a fact-sensitive question which can only be decided on a case-by-case basis, and cannot constitute a question of great general or public importance.

18.  For the above reasons, we also decline to give leave to appeal to the Court of Final Appeal on Question 2.

‘Or otherwise’ limb

19.  P1 submits that because “prima facie fraud is at stake”, substantial and grave injustice would be done if the matters were not permitted to go to trial (at §15 of P’s written submissions dated 4 October 2021). For this reason, P1 invokes the ‘or otherwise’ limb.

20.  We are not satisfied there is any basis for invoking the ‘or otherwise’ limb which is highly exceptional in nature. P1 is seeking to re-argue the merits of his claims or proposed claims which, for all the reasons given above, are plainly unsustainable.

21.  In any event, it is the practice of the Court of Appeal to defer to the Appeal Committee of the Court of Final Appeal as to whether leave to appeal should be granted on the ‘or otherwise’ limb.

Conclusion and costs

22.  For the above reasons, we decline to give leave to appeal to the Court of Final Appeal.

23.  Cost of the application should follow the event. We order P1 to pay the costs of D1, D2 and D13 in this application. We would not grant a certificate for two counsel for D13.

24.  Having considered the statements of costs for summary assessment submitted by D1, D2 and D13, we assess the reasonable costs of D1 and D2 at $66,351, and that of D13 at $63,890.