WONG KOON WAH v. All persons in occupation of Lot No. 775 in Demarcation District 216 AND ANOTHER

HCMP 1716/2012

[2020] HKCFI 1260

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

MISCELLANEOUS PROCEEDINGS NO 1716 OF 2012

_______________________

______________________

_____________________________________

REASONS FOR DECISION

_____________________________________

Introduction

1.  In this action, the plaintiff (P), the registered owner of a piece of land in Sai Kung, claims for possession of the land against the defendants.

2.  The 2^nd defendant’s (D2) case is essentially that (i) P held the land on resulting trust and/or constructive trust by common intention and/or understanding of the parties for one Ho Loi Fat (“Ho”) through whom and successors D2 obtained beneficial ownership of the land; or alternatively, (ii) P is estopped from recovering possession by reason of his representation by conduct in having executed an irrevocable power of attorney in 1979 (“1979 P/A”) and parted with possession of the land with the intention that Ho and other persons would rely thereon to their detriment; and/or alternatively (iii) if Ho and his successors including D2 did not have beneficial ownership of the Land, D2 has acquired a possessory title to the land by virtue of adverse possession since around 1996.

3.  The trial of the main action is due to commence in about 6 weeks ie on 29 July 2020 and estimated to last 8 days.

4.  Shortly before the PTR on 2 June 2020 (originally fixed on 18 March 2020, refixed to 7 April 2020 and later refixed again to 2 June 2020 due to the general adjournment of cases because of Covid-19), two summonses were issued on behalf of D2, as follows:

(i)     A summons issued on 21 May 2020 to amend its (a) Amended Defence and Counterclaim and (b) Defence to P’s Counterclaim to Counterclaim (“Amendment Summons”);

(ii)     A summons issued on 1 June 2020 for leave to file a new witness statement, namely that of Li Fung Cheung, John, a solicitor (“Mr Li”), contained in Mr Li’s affidavit sworn on 29 May 2020 (“New Evidence Summons”).

5.  On 3 June 2020, D2’s 5^th Supplemental List of Documents was filed and served on P which set out documents disclosed by Mr Li in his affidavit (“5^th Supplemental List”).

6.  P opposed both summonses and late filing of D2’s 5^th Supplemental List of Documents.  As the PTR was only fixed for 30 minutes, the disputed matters were then adjourned to 16 June 2020 for substantive arguments.

7.  Mr Chan Chi Hung SC and Mr Derek JY Chan appeared for P at the hearing, and Mr Eric Shum and Mr Duncan Ho appeared on behalf of D2. 

8.  At the end of the hearing, this Court ordered as follows:

(1)     In relation to the Amendment Summons:

(i)     For D2’s Amended Defence and Counterclaim, save for those agreed proposed amendments, only the proposed amendments to add prayers (a) and (b) under paragraph 16 are allowed;

(ii)     For D2’s Defence to P’s Counterclaim to Counterclaim, the proposed amendments are not allowed.

(2)     In relation to the New Evidence Summons, leave granted to D2 to serve a Re-Amended witness statement contained in the Mr Li’s affidavit sworn on 29 May 2020;

(3)     Leave granted to D2 to file and serve the 5^th Supplemental List of Documents.

9.  My reasons are set out hereinafter.

The Amendment Summons

The Pleadings

10.  I will first set out the chronology of the filing of the parties’ respective pleadings.

11.  P’s originating summons was issued under Order 113 of the Rules of the High Court on 16 August 2012.  On 24 May 2013, upon application by D2, leave was granted for D2 to join as a defendant in this action and further the action was ordered to be treated as having commenced as writ and directions were given for filing of pleadings.

12.  P’s statement of claim was filed on 5 July 2013[1] (“SOC”)  pleading that essentially he, an indigenous villager, was and is at all material times the registered owner of Lot No 775 in DD 216 (“Land”), and he seeks amongst other things possession of the Land and damages.

13.  On 21 August 2013, D2’s defence and counterclaim (“D&C”) was filed and it was pleaded therein, amongst other things, that by about 1996, a company called Edico Development Limited (“Edico”) had occupied and was in possession of the Land, and that it was in about 1996 that D2 took over possession of the Land from Edico, and since then until 2009, D2 had remained in undisturbed possession of the Land up to the date of the D&C. D2 counterclaimed for a declaration that P’s claim for possession was statute-barred, and that D2 had acquired a possessory title to the Land.  Thus the only relief sought in the D&C was based on D2’s adverse possession of the Land.

14.  P’s case in his reply and defence to counterclaim dated 3 September 2013 (filed on 11 September 2013) (“RDC”) was that amongst other things he migrated to London to unite with his family on or about 7 May 1977, and that prior to his moving to London, pursuant to the suggestion of his elder cousin Wong Si Man (“Wong”) [and Ho, ie Wong’s father-in-law][2], P made an application to the then Sai Kung District Office for a grant to build a small house on the Land under the “Small House Policy”, and that, from facts discovered after the commencement of this action, a number of persons including Wong, Ho, one Lock Kwan Bui (“Lock”), and Edico and a number of persons unknown to P combined and conspired together to defraud P of the Land and to injure him and cause him loss of the Land by unlawful means. 

15.  It was not admitted by P in his RDC that Edico or D2 had been in possession of the Land or had acquired any possessory title, and that, amongst other things, it was P’s pleaded case that (i) contrary to D2’s allegation that it took over possession of the Land since 1996 (which was not admitted), Edico remained involved in the development of the Land, since the alleged takeover by D2, and further, (ii) if Edico or D2 was in possession, such possession was tainted by illegality and frauds committed by Edico and conspirators against P and the Government and does not count as the requisite period of adverse possession under the Limitation Ordinance, Cap 347. 

16.  In the RDC, P counterclaimed to D2’s counterclaim for a tracing enquiry and an account against D2 for all profits or fruits of such development on the Land and for an order for payment of such profits or fruits to P (“CC”).

17.  D2 then filed a defence to P’s CC or a rejoinder on 5 November 2013 (hereinafter referred to as “Rejoinder” for easy reference), and P filed a reply dated 26 February 2014 (filed on 8 April 2014) to D2’s Rejoinder (“Reply”).

18.  D2 filed further and better particulars of its D&C on 29 September 2014.

19.  P filed an amended reply on 8 July 2015 to D2’s Rejoinder (“Amended Reply”)[3].

20.  It would appear that on the same day, ie 8 July 2015, P also filed an amended RDC (dated 21 April 2015) (“ARDC”).

21.  On 14 July 2017, D2 filed an amended defence and counterclaim (“AD&C”)[4].

22.  On 28 July 2017, P filed a re-amended reply and defence to counterclaim (“RRDC”), and finally on 19 October 2018, P filed a re-re-amended reply and defence to counterclaim (“RRARDC”)[5].

23.  The pleadings then closed.

The proposed amendments

24.  The Amendment Summons was supported by the 5^th affirmation of Ms Mak Ka Yan Claire of D2’s solicitors’ firm.  There were no explanations for delay save that when preparing for the PTR, D2 had been advised by Counsel that there should be the proposed amendments.  

25.  As pointed out by Mr Chan SC on behalf of P, it is now trite that the PTR is not the occasion to make late applications for amendment of pleadings to “tidy up” one’s case.

26.  Mr Shum accepted that the proposed amendments were late and submitted that the main purposes of the proposed amendments were :

(i)     for the amendments to the AD&C, to add additional relief under prayers (a) and (b);

(ii)     for the Rejoinder, making consequential amendments upon   P’s amendments to his CC;

(iii)     other minor amendments are only to tidy up the pleadings, touching up words used and volunteering particulars.

The proposed amendments to the AD&C

27.  By the time of the hearing, some of the amendments were agreed by P save for two of the amendments.

28.  The first one was in relation to paragraph 3(f) sub-paragraph (v) concerning the salient features of the First Building Agreement (as defined therein).  Mr Shum submitted that as it was already pleaded in the original paragraph 3 (i) that there was no real intention for the sum of HK$545,000 to be paid by P and the said sum was not paid, the amendment in sub-paragraph (v) was to set this out.

29.  The only purpose of this amendment seemed to be to transpose the original paragraph 3(i) to 3(f)(v) for “better flow”, but as pointed out by Mr Chan SC, this purely cosmetic change would result in the re-numbering of all subsequent sub-paragraphs and would require P to spend unnecessary time and cost to re-amend the RRARDC to re-position its response to that plea. 

30.  I agreed with Mr Chan and found that the proposed amendment served no purpose.  It was neither necessary for disposing fairly of the cause or matter nor for saving costs under Order 20 Rule 8(1A) of the Rules of the High Court.  I did not allow this amendment. 

31.  In relation to the proposed addition of prayers (a) and (b), as mentioned earlier, all along the only relief sought by D2 in his D&C/AD&C was a declaration based on adverse possession, and the amendments would result in D2 seeking a declaration that (i) D2 is now the beneficial owner of the Land subject to the rights of Edico as it may be entitled to as D2’s partner under the JV Agreement; and (ii) a vesting order.

32.  Mr Chan submitted that the new prayers would introduce new relief and also fundamentally changed D2’s primary (and only) cause of action in his counterclaim from one of adverse possession/possessory title into a primary claim that D2 is the beneficial owner of the Land, with the adverse possession claim now only an “alternative” relief under prayer (c).   He further submitted that it is far too late for the goal posts to be shifted in such a fundamental manner when the trial is only several weeks away, and that P simply would have no adequate opportunity to consider how it would meet this new claim, let alone to adduce the evidence on the same, and that being placed in this difficult position would itself be prejudice.

33.  Mr Shum however submitted that the new prayers sought are simply the legal consequences of D2’s case which flow from D2’s present pleaded case in the AD&C, namely that P is a mere trustee whereas D2 is the beneficial owner of the Land, and that the new relief adds nothing in terms of fact and will not cause any prejudice to P.

34.  Mr Shum relies on the case of Mui So Bing v Wan Chi Shing [2020] 1 HKC 85 (on P’s list of authorities) where it was held that the rationale under Re Vandervell’s Trusts (No 2) that it was not required to plead legal consequences appeared to be avoidance of over-technicality and the rule in the Rules of the High Court O 18 r 7 that evidence should not be put into pleadings; since Re Vandervell, legal practice has changed significantly that the notion that the pleader may plead only the facts or plead the facts with a specific legal consequence, leaving his opponent and the court to second-guess the legal consequence he may choose to argue at trial or on appeal was inimical to the underlying objectives of the Civil Justice Reform; and that consideration should be given to requiring legal representatives to plead not only material facts, but also all the legal consequences to which those facts validly lead, with the effect that the parties would be barred from contending different legal consequence on appeal[6].

35.  Mr Shum further submitted that in the present case that the amended relief would be based on present pleaded facts and there would be nothing added in the pleadings, nor was there any need for P to further amend his RRARDC as P had therein denied everything, and that D2’s proposed amendments would only be to alert P on the legal consequences on the pleaded facts.

36.  Mr Chan had referred this Court to the Li Xiao Yun and another v China Gas Holdings Limited, CACV 38/2013, Reasons for Judgment dated 11 March 2013.  In that case, there was a late application for leave to the plaintiffs to add new defendants and to amend the pleadings to advance claims against those new defendants and leave was not granted by Mimmie Chan J.  The plaintiffs had lodged an urgent appeal.  The applications were made by the plaintiff about two weeks before the trial was due to commence, and if the appeal were allowed, the trial which was due to start would have to be adjourned until the following year.  

37.  The Court of Appeal dismissed the plaintiffs’ appeal. Lam JA , as he then was, pointed out that the proposed amendments were very substantial and involved joinder of 9 defendants and apart from tidying up paragraphs pertaining to the causes of action originally pleaded, an entirely new case was pleaded, and many allegations which had not been relevant to the issues raised in the then pleadings would become relevant and the focus of the case would be completely shifted and that the preparation of the case on the part of the defendant would have to be substantially altered.  The Court of Appeal found that Ps’ explanations for delay “utterly unconvincing”.  The Judge had concluded that there were no exceptional circumstances under Order 25 Rule 1B(3) of the Rules of High Court warranting the grant of leave which had the inevitable effect of derailing the trial dates, and that the proposed amendments were neither necessary for disposing fairly of the cause or matter nor for saving costs under Order 20 Rule 8(1A)[7].

38.  The significance of the consequential delay considered by the Judge included that there had been an order for speedy trial with trial dates originally scheduled a year earlier and there were amendments to the statement of claim which occasioned the vacating of the original trial dates, and expert directions had been given and yet up to the pre-trial review, there was no indication by the plaintiffs that they were intending to make those applications before the Judge.  The Judge concluded that there were no exceptional circumstances (under Order 25 Rule 1B (3)) warranting the grant of leave to amend and joinder which would have the inevitable effect of derailing the trial dates.

39.  The facts of each case are different.  In the present case, although the relief sought in D2’s counterclaim was only a declaration as to possessory title, D2’s case throughout has been that P is a mere trustee holding the Land on trust for Ho who paid for the issue of the New Grant and Ho was the beneficial owner of the Land and further Ho, as P’s attorney pursuant to the 1979 P/A then entered into a development agreement with a developer for the development of the Land and through it successors, D2 had acquired beneficial ownership and possession of the Land.  The key issues are (i) whether P was at all material times/is a mere trustee; (ii) whether P had executed the 1979 P/A in favour of Ho and parted with possession of the Land; (iii) whether there was fraud or concealment and if so, when this was discovered; (iv) whether and when D2 obtained possession and/or beneficial ownership of the Land. The proposed amendments to add the reliefs sought in the AD&C are in my view necessary for the administration of justice and in light of what was held in the case of Mui So Bing.  The proposed amendments should not derail the trial, as that that there were no other amendments of the pleadings of the material facts, and notwithstanding the submissions of Mr Chan, in my view, the proposed amendments should not cause P any real prejudice. 

40.  For the above reasons, I granted leave to D2 to amend the prayer of the AD&C to include the new paragraph (a) and (b) under paragraph 16. 

41.  I expect the parties to be able to agree to any consequential amendments.

The proposed amendments to the Rejoinder

42.  As for the D2’s proposed amendments to the Rejoinder, Mr Shum argued that most of the proposed amendments are consequential amendments to P’s amendments to his CC and that the order of Master Lui made on 15 October 2018 did not provide for leave for D2 to file any consequential amendments at the time.

43.  D2 could have sought the directions to file any consequential amendments at the time but chose not to do so.  There were no reasonable explanations as to why it was left so late.

44.  The disputed amendments are the new paragraphs 16A7, 16B, and 19 (a) – (h).

45.  Paragraph 16A (including new paragraphs 16A1-16A7) concerned the Government’s Small House Policy.  In the proposed paragraph 16A7, D2 tried to add a pleading on the “irresistible inference”.  As submitted by Mr Chan, this would be an allegation of fact as to P’s state of mind and/or his motive for allegedly “lending his name” which had not previously been raised.  There was no explanation in Mr Shum’s submissions or in the supporting affirmations as to how such allegation would advance D2’s case or would affect the issues at trial.  In my view, this proposed amendment was not necessary for disposing fairly of the cause or matter, nor for saving costs.  I did not allow this amendment.

46.  As for paragraph 16B, as pointed out by Mr Chan, P’s case on deferral of the limitation period under section 26 of the Limitation Ordinance for concealment and fraud was pleaded as early as October 2018, and D2 did not seek leave to amend the Rejoinder to raise a positive case that the concealment or fraud could and should have discovered with reasonable diligence by P well before 1990.

47.  In my view, this proposed amendment was also not necessary for disposing fairly of the cause or matter nor for saving costs.  I did not allow the amendment.  In any event, when P discovered the fraud or concealment is a question of fact and Mr Shum will have the opportunity to cross examine P on his evidence during the trial and to make submissions on P’s credibility.   

48.  Under paragraph 19, D2 was proposing to introduce sub-paragraphs (a) – (h) as “voluntary particulars” of his pleading that P had by conduct waived or abandoned the same by acquiescence and laches for over 30 years.

49.  The original paragraph 19 was a bare assertion and by the latest proposed amendment that D2 was seeking to rely on its alleged detriment and reliance.

50.  The amendments in sub-paragraphs (a) – (h) under paragraph 19 were not amendments simply to tidy up D2’s case and that new factual matters were introduced, as to whether P would have noticed the registration of the alleged forged documents with reasonable diligence well before 1990 and in any event by 1995.  There were no reasonable explanations as to why these amendments were left so late.  As observed by DHCJ Lok, as he then was, in Waddington Limited v Chan Chun Hoo Thomas and others, HCA 3291/2003, Reasons 07.05,13, the parties in that case had taken out a lot of late applications shortly before the PTR and that this practice was highly unsatisfactory and should be discouraged.  As said by the Judge, express warning about late applications has already been given in paragraph 34 in PD 5.2, and practitioners should be reminded that late interlocutory applications may be dismissed on the basis of delay alone[8]. In my view, this proposed amendment was not necessary in disposing fairly of the cause or matter nor for saving costs.  I did not allow those amendments to the Rejoinder.

The New Evidence Summons and the new evidence

51.  In Civic Limited v余綺妙and others, HCA 225/2011, Reasons for Decision, 12 July 2013, DHCJ M Ng, as she then was, has summarised the legal principles at paragraph 20:

“20. As explained in Liu Chen at para.55 (see also Kinetics Medical Health Group Company Limited & ors v Dr Tse Ivan Cheong Yau HCA1115/2010 (unreported, 8 May 2013) at para 49), whether a court will allow a late application for further discovery (and for that matter a late witness statement that purports to explain documents newly discovered at a late stage of the proceedings) is a balancing exercise and the considerations of the court are largely three-fold:

(a) the merits of the proposed application, ie whether the application if granted will assist the court in securing ‘the just resolution of disputes in accordance with the substantive rights of the parties’ (see Order 1A rule 2(2) of the Rules of the High Court (“RHC”));

(b) the presence or absence of any real prejudice to the other party;

(c) any conscious flouting of rules of court, practice directions and/or case management timetables, or any over-reaching or deliberate manoeuvring on the part of the applicant.”

52.  It was not P’s allegation that there was any conscious flouting of rules of court/practice directions and/or case management timetable or any over-reaching or deliberate manoeuvring on the part of D2 and the main considerations for this Court were (a) and (b) above.

53.  Mr Li was the solicitor who attested P’s signature on the allegedly forged 1979 P/A.  D2’s solicitors had contacted Mr Li previously on 25 April 2017 to try and seek further information from Mr Li as to the 1979 P/A and there was also a further follow up telephone call at the time by D2’s solicitors, and Mr Li’s then response was that he doubted if the relevant file could be located due to the long lapse of time.  Mr Li has explained in his affidavit that after receipt of the letter and the telephone call, he asked his staff to locate the file concerning the 1979 P/A and that he was able to find the file reference of the matter.  He said he had told his staff to try to locate the file in his firm’s storage godown but was informed that in 2005, the said file could have been destroyed when his firm destroyed files opened prior to the year 1990. Further, there was no further communication from D2’s solicitors.

54.  In fact, P’s solicitors had also tried to contact to Mr Li’s firm previously in October 2008 and were informed that the original 1979 P/A was not in the possession of Mr Li’s firm and thereafter there was no response to their letter to Mr Li. 

55.  Anyway, on 6 March 2020, D2’s solicitors wrote again to Mr Li[9] and that according to Mr Li, upon receipt of this letter this time, he then personally went to his firm’s storage godown and eventually discovered a box containing the relevant file and that in the box he found documents set out by Mr Li in his affidavit, and which are now set out in D2’s 5^th Supplemental List.

56.  It now appears from Mr Li’s affidavit that the 1979 P/A could have been executed by P in escrow.

57.  Mr Chan submitted that the proposed new case that the 1979 P/A was signed in escrow was unpleaded. Further, if the new evidence were allowed, P would suffer real and significant prejudice which could not be compensated by an order for costs and that P would also be deprived of a reasonable opportunity to obtain and adduce expert evidence on the forgery of the 1979 P/A since previously P was relying on only the fact that he was not in Hong Kong on the date of the 1979 P/A.  The proposed new evidence would also lead to P’s entitlement to seek further discovery either from D2 himself or from Mr Li as a non-party and given the proximity of the trial, such an exercise would not be feasible and that even if Mr Li were willing to provide such documents, there would simply not be sufficient time for P to properly analyse and deal with their significance.  Also, the late application to call Mr Li as a witness has led to the duty-bound disclosure by P’s Counsel team that they have had regular instructions (including on-going cases) from Mr Li’s firm and from Mr Li in the past few years, including cases where Mr Li was himself the handling partner or the solicitor on record.

58.  As submitted by Mr Chan, if the new evidence were allowed, P may need to find a handwriting expert in on English signature/characters, as P’s present expert is on Chinese characters, and that it may take time for the handwriting expert to produce a report. Further such new evidence will no doubt prolong the trial. 

59.  Mr Chan referred this Court to the Lo Hom Chau v Director of Marine and Koo Sze Yiu (Putative Interested Party), HCAL 59/2009, unrep, 17 March 2010 in which the points sought to be raised, which were raised only two weeks before the scheduled hearing of the substantive application, were new ones which had never been relied on by the applicant.  Andrew Cheung J, as he then was, that if allowed, the substantive hearing would have to be adjourned or the parties and the Court would have to deal with the new issues in haste, neither of which was an attractive option, and that adjourning the hearing part-heard was not an alternative worthy of serious consideration[10].

60.  P has had notice of Mr Li’s affidavit since about end of May 2020 or by 1 June 2020.  The trial is still 6 weeks away, and at this stage there is no sufficient evidence that it will be derailed.  If P feels that in light of his Counsel’s disclosure in relation to they having had regular instructions from Mr Li and/or his firm, there is still time to bring in another Counsel for the purpose of cross examining Mr Li.  As for further discovery, there is no sufficient evidence that this matter will not be agreed.

61.  I accept that the new evidence will very likely prolong the trial.  On the other hand, allegations of fraud and forgery are very serious allegations and in fact there was a report made to the police by P.  Mr Li is an officer of the Court, and has the duty to assist the Court and having considered Mr Li’s affidavit, I am of the view that the evidence in his affidavit is crucial and will assist the Court in securing the just resolution of disputes in accordance with the substantive rights of the parties.  Even if it means the trial being prolonged or split or adjourned part-heard, this is an exceptional circumstance justifying it.

62.  Having balanced the pros and cons and the prejudice caused to P and to D2, I came to the conclusion that the balance should tilt in favour of granting leave to D2 to introduce Mr Li’s affidavit and the new documents set out in the 5^th Supplemental List.  I so ordered at the hearing.

Costs  

63.  As said by Lam JA, as he then was in the Li Xiao Yun case, last minute pre-trial applications also disrupt the preparation for the trial on the part of a trial judge in terms of reading into the case, and instead of getting himself or herself familiar with the issues that have to be tackled at the trial, the judge would have to divert attention and spend time and efforts on such applications.  He went on to say that such practice has to be discouraged and, unless there are good justifications, the unsuccessful appellant should normally be expect to face an order for indemnity costs.  Although the statement was said in the appeal context, I do not see why it should not be the same approach for the application at first instance.    

64.  With what was said above in mind, although D2 succeeded with one amendment in the Amendment Summons and succeeded in its entirety of the New Evidence Summons and the 5^th Supplemental List, I made an order that the costs of the two summonses and the hearing be paid by D2 to P, to be summarily assessed on indemnity basis and paid forth by D2, with certificate for two counsel.  I will just add that in relation to the New Evidence Summons and the 5^th Supplemental List, I do not find miscommunication between D2’s solicitors and Mr Li, if any, was a sufficient excuse for lateness of the application, or not ordering costs against D2 on indemnity basis.