SUNKY FINANCE LTD v. LUI CHI KEUNG AND OTHERS

No. 6553 of 1984

IN THE SUPREME COURT OF HONG KONG

HIGH COURT

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JUDGMENT

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1. In this case the Plaintiff by its statement of claim issued on 24th September 1984 claims from the Defendants $808,400.00 under a hire purchase guarantee and indemnity dated 2nd November 1982. It alleges that the Defendants guaranteed payments due to it under a hire purchase agreement dated 25th September 1982 from the hirer Chung Ngai Graphic Arts Co. (Chung Ngai) for the purchase of certain equipment, and that Chung Ngai has defaulted.

2. In October 1984 the Plaintiff applied for summary judgment under Order 14. The Defendants opposed the application and the first Defendant in his affidavit filed on 14th November 1984 took the point that there was only past consideration i.e. that the hire purchase agreement preceded the guarantee. The Plaintiff did not deal with this defence but on 17th November 1984 asked for leave to amend his statement of claim by reducing his claim from $808,400.00 to $189,200.00 representing not the entire hire purchase balance but only the unpaid instalments due. He was given leave on 22nd November 1984.

3. On 28th November 1984, the Defendants filed a cross summons to strike out the Plaintiff's amended statement of claim. The Plaintiff made no response at all and on 3rd December 1984, the Master struck out the amended statement of claim. From that decision of the Master the Plaintiff now appeals and asks that the order striking out the amended statement of claim be revoked, the amended statement of claim be restored and that the Plaintiff be given leave to re-amend the amended statement of claim.

4. I must say at once that the Master seems to have been entirely right in striking out the amended statement of claim. But the Plaintiff, as he is entitled to do, has now put in the affidavit of one of its officers, together with certain exhibits. These prima facie show that the Plaintiff was at the time not in funds, so that funds had to be obtained from Wayfoong Credit Limited. Wayfoong was to be paid early each month by instalments obtained from Chung Ngai. To ensure that there was enough time to collect the instalments from Chung Ngai and remit them to Wayfoong by the time they were due, they had to be made due from Chung Ngai somewhat earlier. Accordingly although the hire purchase agreement was made on or about 2nd November 1982, after and on the strength of the guarantee, the date of the agreement was left blank. Subsequently with the consent of Chung Ngai, it was back-dated to the 25th September 1982. Thus the instalments became due on the 25th of each month, sufficiently early to enable them to be remitted to Wayfoong in good time.

5. It is not for me to decide at this stage the truth of the Plaintiff's elaborated version of material events. It could be true and form the basis of a sustainable claim; or to put it in another way, it seems that by amendment the claim could be improved so as no longer to be obviously unsustainable.

6. If then I exercise my discretion in effect not to strike out the amended statement of claim, should I also exercise my discretion to grant leave to amend? The two questions are clearly entertained. Miss Sze for the Defendants says that I ought not to accede to the Plaintiff's application and points to the Plaintiff's delay in putting forward the real nature of its claim. On the authority of James v Smith [1891] 1 Ch 384, she says that the Plaintiff ought not to be permitted to rely upon a new ground. However that case is clearly distinguishable, as the judge was asked to allow an amendment at the last moment, apparently after argument and the submissions had been made. That is far from being the case here.

7. Miss Sze also referred to CLARK V WRAY [1885 Ch. D 69] in which Bacon V.C. refused leave to amend, both because it was sought to raise a new case, and because of the length of time that had elapsed. That case, too, can be distinguished. In the words of Bacon V.C., the Defendant sought to present "a totally distinct, new, and inconsistent case". And the delay was considerably greater.

8. Having reviewed the authorities cited by both sides, most of which are referred to in the relevant summaries in the Supreme Court Practice 1985, I accept the position outlined at paragraph 18/19/5:

"The Court will generally give leave to amend a defect in pleading, rather than give judgment in ignorance of facts which ought to be known before rights are definitely decided."

And at paragraph 20/5-8/6:

"It is a guiding principle 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 proceeding or of correcting any defect or error in any proceedings".

Whatever may have been the position earlier, Mr. Chan for the Plaintiff has now on the strength of the affidavit and exhibits, demonstrated in some detail a prima facie case to which the law does not appear to present any obvious obstacles. I think the Plaintiff should be allowed to present that case to the Court for determination. The Defendant will not be taken by surprise, and can be compensated for the costs incurred in this appeal.

9. For the foregoing reasons I allow the Plaintiff's appeal, set aside the Master's order striking out the amended statement of claim, restore the amended statement of claim and grant the Plaintiff leave to re-amend the amended statement of claim in the manner indicated in the exhibit marked "LPYY-5" annexed to the affidavit of Linda P.Y. Yu. I make an order nisi for the costs of this appeal to be the Defendant's. Because of the inept manner in which the Plaintiff's pleadings were prepared, I was minded to award costs on a solicitor and own client basis. But since that was not asked for, I will only order, as requested, that the Defendant's costs of this appeal be paid forthwith upon the expiration of 14 days from the date of this judgment.