CHEERUP LTD. v. WONG SAU FONG

1992, No. A4461

IN THE SUPREME COURT OF HONG KONG

HIGH COURT

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R U L I N G

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1. Mr Mui, for the plaintiff, applies for an amendment of the Statement of Claim herein for the purpose of raising the point that the defendant failed to comply with the provisions of the provisional agreement for backing out of it on the ground that she was out of time in making the necessary payments. The amendment seeks to plead that the payments ought to have been made on or before 29 June 1992, but they were received on 30 June 1992.

2. While it is a matter for my discretion whether to grant the application to amend, it is a guiding principal of cardinal importance on the question of amendment that, generally speaking, all such amendments ought to be made "for the purpose of determining the real question in controversy between the parties to any proceedings or of correcting any defect or error in any proceedings" (see para.20/5-8/6 of the Supreme Court Practice, 1997, Vol.1). Another passage is also relevant. At para.20/5-8/12, the learned editors state :

"... the grant of an amendment by the trial judge is a matter for his discretion to assess where justice lies, having regard to many factors such as the strain of the litigation particularly on personal litigants the anxieties occasioned by facing new issues, the raising of false hopes and the disappointment of legitimate expectations since justice cannot be measured by money."

3. When the trial of this action commenced yesterday morning, i.e., 25 November 1996, Mr Mui told me the following :

(a) There were two bundles, a bundle containing pleadings and the statements of three witnesses, and another bundle containing documents which were agreed as to authenticity and admissibility.

(b) Both parties agreed not to call witnesses and asked the court to ignore the witness statements.

(c) The only issue as agreed between the parties was the proper construction of the provisional agreement and whether the defendant was entitled to back out of it by paying $20,000 to the plaintiff and $8,000 to the estate agent, but the fact was that both payments were refused.

(d) There was no dispute as to the time of tender of the payments made by the defendant being too late.

4. Mr Li, for the defendant, confirmed the matters agreed and he then informed me that regarding the counterclaim, he would only ask for the declarations set out in paragraphs (1) and (2) of the relief which are to the effect that the defendant was entitled to rescind the provisional agreement and that the plaintiff was not entitled to register the writ herein as a lis pendens against the property. He expressly said he would not pursue the claim for damages and interest.

5. Yesterday afternoon, during the course of referring me to the decision of the Court of Appeal in Man Sun Finance (International) Corp v. Lee Ming Ching Stephen [1993] HKC 113, Mr Mui all of a sudden made known his wish to amend the Statement of Claim. I asked him to formulate the proposed amendment before I would decide whether I should accede to his application. Thus, this morning's proposed amendment.

6. Mr Li opposes to the application to amend. His main reasons are as follows :

(a) There was an agreement between counsel at the commencement of the trial which has been acted upon by both parties, and the parties should not be entitled to retract from that agreement;

(b) It was upon Mr Mui's own initiative that counsel agreed not to call evidence and to frame only one issue, i.e., the proper construction of the provisional agreement, to be determined by the court;

(c) Allowing the amendment would open up this action to be fought on an entirely different basis from that agreed between counsel;

(d) The attempt to raising the issue of time of tender is too late; and

(e) There would be prejudice suffered by the defendant if the amendment was allowed in that any delay caused thereby might result in the defendant losing on the good realty market. There would undoubtedly be delay in that the defendant would need time to amend her Defence and Counterclaim. New points would have to be raised in the Amended Defence and Counterclaim on the question of time, including the plaintiff's failing to comply with the alleged stipulated time to tender the amount of $70,000. Time would also be required to gather evidence on the issues of time, Mr Ng of the defendant's solicitors who wrote and sent the letters to the plaintiff's solicitors, who would be required to give evidence, having left the defendant's solicitors, and evidence might have to be obtained from the messenger who sent the letters. There would be a floodgate of evidence. New dates would have to be fixed for the trial and the delay might cause prejudice to the defendant regarding her liberty and right to sell the property in the existing good realty market.

7. Mr Mui on the other hand tells me that the agreement between him and Mr Li at the commencement of the trial, and in particular that there would be no issue on the time of tender of the payments, was made under a mistake, in that he did not realise the significance of the time element until he referred me to the Man Sun Finance case, and that he did not know that the payment of $20,000 to the plaintiff by the defendant was received on 30 June 1992, one day later than the time allegedly stipulated in the provisional agreement. Mr Li referred me to the witness statement of Mr Chung Chor Suen, representative of the plaintiff, which stated that the money was received on 29 June 1992. Of course, this witness statement and other witness statements had been agreed not to be used at the trial, but Mr Li just referred me to it in his opposition to the application for amendment. Further, in Mr Li's Submissions of the Defendant which Mr Mui admitted to have been received by him last Friday, 22 November 1996, a schedule of authorities was attached. The Man Sun Finance case was referred to with the following remark : "However, the vendor must make the double refund of the deposit paid on or before the date specified for the signing of the formal sale & purchase Agreement. Failure to do so would mean that the vendor cannot not (sic.) exercise the right to resile from the sale." Mr Mui told me that he had read all the papers before he came to court, and if that was true, then he could not have failed to notice this reference to the Man Sun Finance case so clearly referred to in the Submissions of the Defendant. I think the late raising of the matter relating to late payment might rather have been caused by Mr Mui's late appreciation of the effect of that decision both on the issue of lateness of payment and the exact wording of the contractual provision in that case which, in the opinion of that Court, albeit obiter, could result in excluding the purchaser from specific performance.

8. It is without doubt that the application for amendment is very late. The matter in dispute arose in 1992 and the writ was issued in 1992, four years before now. The parties proceeded with the trial on the basis that no oral testimony was needed, and to the extent that the witness statements should be disregarded by the court. To allow the amendment would certainly require two or three days to be re-fixed for the hearing of the action, and that would take place sometime next year. It would become a dispute on many more issues and a witness action with evidence to be called by both parties. The delay caused to a judgment being given timeously in the action as legitimately expected would result in a risk that the defendant's interest and rights in the property might be prejudiced. The defendant must have been anxious to have this matter decided once and for all and very soon. The prejudice to her could not be compensated for by costs.

9. Further, the amendment is based on the success of the allegation that the payments made by the defendant must reach the plaintiff and the estate agent on 29 June 1992. This date was only referred to in [Item B] of the provisional agreement, and no where else. [Item B] reads :

"Second instalment of the Deposit SEVENTY THOUSAND DOLLARS ONLY HK$(70,000.00) to be paid by banker's cashier order before the 29th day of June 1992 upon the Purchaser attends Tang, Liu / the Vendor attends Chu Kam Keung, Solicitors, for execution of the Formal Agreement for Sale and Purchase."

If Mr Mui is right that this term supports his amendment that the defendant was late in making the payments on 30 June 1992, that must be on the basis that the payments must be made, as stipulated in the provisional agreement, on or before 29 June 1992. That, however, is contrary to the clear stipulation in [Item B] in that the time provided for was "before the 29th day of June 1992" and not "on or before 29th June 1992" as pleaded in the proposed amendment. If this interpretation of the Item is correct, then it is not difficult to see that the defendant is free to rely on it that the plaintiff did not provide the second instalment of $70,000 of the purchase money within time. This would be a defence open to the defendant that the plaintiff had failed to comply with the stipulations in the provisional agreement thereby debarring the plaintiff from succeeding on its claim. If the plaintiff is allowed to amend to raise a new point based on the stipulated time required for performance of obligations under the provisional agreement, I cannot see any justification why the defendant is not entitled to be given the same latitude to raise this new point. The whole action would become a new ball game altogether, quite different from what counsel had agreed when the plaintiff opened its case. I must say that the attempt to amend on the part of the plaintiff is too late after so much has been gone through, and the new point that could be raised by the defendant might well defeat the plaintiff's claim.

10. In all the circumstances of this case, I do not feel it just or fair to allow the plaintiff to resile from counsel's agreement or to allow the proposed amendment.

(K.H. Woo)

Judge of the High Court