LIM BAN THOON v. CHINTUNG SERCURITIES LTD.

Headnote

Practice and procedure - application by plaintiff under Rules of Supreme Court 0.15, r.6 for leave to join additional defendants - the appropriate date to determine whether the relevant period of limitation has expired where the application is filed before the expiry date, but the court determines the application after that date.

BETWEEN

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J U D G M E N T

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Fuad, V.-P. (giving the judgment of the Court):

1. The plaintiff in this action, Lim Ban Thoon, appealed against a decision of Mayo, J. dated 3rd May 1991 whereby he allowed an appeal from an order made on 15th April 1991 by Master Jones giving leave to the plaintiff to re-amend his writ and statement of claim by adding Arthur Cheuk Kwan Lai, James Coe and Plains Energy Inc. respectively as the 2nd, 3rd and 4th defendants in the action. While the order of the judge stood, the only defendant in the action was Chintung Securities Ltd.

2. At the conclusion of the hearing before us on 29th October 1991, we allowed the appeal, set aside the order of Mayo, J. and restored the order of Master Jones granting the plaintiff the relief he had sought. We now give our reasons.

3. The plaintiff issued his writ, indorsed with a statement of claim, on 9th July 1987. On 8th December 1987 a very minor amendment (under 0.20, r.3) was made to the statement of claim, altering the figures in one of the schedules. The defence was filed on 14th January 1988.

4. Steps preliminary to trial were taken by the parties at a somewhat leisurely pace. The plaintiff took out the summons out of which this appeal arises on 29th September 1990. The hearing before the Master had been fixed for 9th October 1990 but had to be adjourned to 15th April 1991.

5. The original action brought solely against Chintung Securities Ltd., a member of the Hong Kong Stock Exchange, was to recover the sum of $8,307,671, with interest, said to have been finance provided by the plaintiff, who is a Singapore business man, by way of a loan to the defendant, which had remained unpaid.

6. It is clear that the amendments proposed to be made to the writ and the statement of claim which, if allowed, would have brought the other proposed defendants into the action, were prompted by the defence which had been pleaded by Chintung Securities Ltd. The following is a summary of the plaintiff's averments in their re-amended form. The plaintiff had been approached by a Singapore stockbroker to provide finance which was to be secured by a block of shares in a Hong Kong company. The stockbroker's contact in Hong Kong was Arthur Lai (the proposed 2nd Defendant) a stockbroker who traded as "Chintung Securities Company". He was also a director and shareholder of the original sole defendant, Chintung Securities Ltd., a stockbroking company. The arrangement was that the money needed was to be provided and repaid by means of a purchase and sale by the plaintiff of the shares at various agreed prices, through the original defendant and/or the proposed 2nd defendant as stockbrokers.

7. It is further averred that the plaintiff provided the money and was issued Bought and Sold Notes by the proposed 2nd defendant. Settlement dates respectively for the purchase and for the sale were 21st May and 31st July 1984. On the latter date, the proposed 2nd defendant, acting for himself and/or as agent for the original defendant, sought an extension of time for repayment. The plaintiff duly granted an extension until 16th August 1984 and the proposed 2nd defendant again issued Bought and Sold Notes to the plaintiff.

8. It was then pleaded that the plaintiff received agreed interest from 21st May to 15th August 1984. On 16th August 1984, the proposed 2nd defendant, again on his own behalf and/or as agent for the original defendant, asked for, and was granted, an extension of the time for repayment until 30th September 1984. It was arranged between the original defendant and the Singapore stockbroker that another (the third) set of Bought and Sold Notes would be issued.

9. The draft pleading continues by averring that since no repayment was forthcoming, a proposal was made for the proposed 2nd defendant (for himself and/or in the capacity of agent for the original defendant) to repay the amount due by monthly instalments of $500,000. Between 15th August 1984 and 15th April 1985 various sums, totalling nearly $2 million were remitted to the plaintiff. A letter of demand for the balance due brought no results and so the writ was issued.

10. By its defence, the original defendant had pleaded that the proposed 2nd defendant was acting for the proposed 3rd defendant, and/or the proposed 4th defendant although it (1st defendant) also acted for the proposed 3rd defendant and/or the proposed 4th defendant in confirming the final extension for repayment, and effecting repayments. Further and in the alternative, the original defendant relied on various defences provided by the Money Lenders Ordinance, Cap. 163.

11. A comparison of the statement of claim in its original form with the form it would have taken if the re-amendment had been allowed demonstrates that the plaintiff was seeking to bring the additional parties into the action, as follows:

(a) the proposed 2nd defendant who had, allegedly been the Singapore stockbroker's contact, and who had issued the sets of Bought and Sold Notes; and

(b) the proposed 3rd and 4th defendants, alleged in the defence to have been the principals in the transaction which gave rise to the action.

12. Miss Maria Yuen, who now appears for the appellant, did not represent him before the Master or before the Judge in Chambers. Mr. William Stone, who represents the respondent before us, appeared before the Master but not before the judge. Mr. Stone confirmed that the Master had heard full argument on the issue of limitation before he rejected the defendant's submission that the action against the proposed additional defendants was barred by limitation.

13. In the judgment he delivered on 3rd May 1971 allowing the appeal from the Master's decision, the judge noted that counsel then appearing for the defendant had drawn his attention to passages in the 1991 Supreme Court Practice at pp.191 and 28. He observed that the passage at p.191 was a commentary on 0.15, r.6 which set out the procedure to be adopted when the action against the proposed added party was plainly time-barred and did not come within the conditions prescribed in s.35(5) of the Limitation Act which was in the same form as _ 347 in this respect. In such circumstances, he said, the notes showed that the procedure to be adopted was that a fresh action should be commenced in respect of the additional parties and consideration could then be given to an application being made to consolidate the two causes.

14. As to the submissions of the plaintiff which had found favour with the Master (that the notes in the Supreme Court Practice had no application to the present case because it was by no means plain that the actions against the proposed parties were time-barred) the judge pointed out that what had not been canvassed before the Master was the fact that the plaintiff had, independently of the summons, issued writs against each of the parties to be added, described by counsel for the plaintiff as protective writs issued to protect his interests.

15. We mention here that a solicitor in the firm acting for the plaintiff had revealed to Mayo, J., by her affidavit, that on 28th September 1990 (the day before the summons seeking leave to add parties was taken out) the plaintiff had caused "protective writs" to be issued against the proposed additional defendants claiming various sums arising out of the same transactions.

16. After remarking that counsel who was then appearing for the defendant had invited him "as a preliminary point to determine whether it was right .... to exercise a discretion in favour of the plaintiff .... when [he] had already opted to adopt the course recommended in the White Book" the judge concluded his judgment as follows:

"    I cannot accept that it is correct that a party should be entitled to issue writs simply as a procedural convenience. If the [plaintiff is] permitted to do this, there is a possibility that [he] will in effect be obtaining an opportunity of dealing with the limitation point on successive occasions.

    In my view, the issuance of the further writs was an important step taken by the plaintiff and the consequence of it is that [he] should be required to adhere to what I would describe as the alternative route referred to in the White Book. I do not consider in the circumstances that it is right that I should consider at this stage all of the matters relating to limitation. For this reason, I would on the preliminary point raised by Mr. Faulkner allow the appeal and refuse leave to add the additional parties to the action."

17. We would observe here that it was common ground that the "protective writs" (which have not yet been served) were issued as a precautionary measure to protect the plaintiff's causes of action against the proposed additional defendants in case it was to be held that the relevant date for the determination of the question whether a period of limitation has expired is the date when leave to amend is granted rather than the date when the application is made. We will return presently to this question.

18. With very great respect to the learned judge, we entertain no doubt that he should not have allowed himself to be persuaded to adopt the course suggested by counsel then appearing for the defendant. As we have seen, the Master had decided after full argument that the relevant period of limitation, on the facts pleaded, had not expired. The plaintiff was maintaining this stand on the appeal from the Master. We feel that the plaintiff should have been given the opportunity of demonstrating, if he could, that his claims against the proposed new defendants, as pleaded in the draft re-amended statement of claim, were not time-barred. In any event, it seems that the judge was applying principles which are applicable where it appears that the limitation period has "plainly expired". Mr. Stone did not suggest that this was the position here. Moreover he fairly conceded that he was unable to argue that he could show a "very clear case" that the action against the proposed new defendants would be struck out and that "the case that the action was not statute barred was unarguable" if the test in Ronex Properties Ltd. v. John Laing Construction Ltd. [1983] QB 398 were applicable.

19. In our view, if an applicant who wishes to add a party is able to show that a limitation period relied upon in opposition to his application has not expired according to the case he seeks to plead, he is entitled to expect the judge to exercise his discretion under 0.15, r.6 with that position in mind. We are unable to accept that the judge's obligation to consider the application on its merits, so to speak, was affected by the issue of the "protective writs", which in our view, were sensible precautionary measures taken on responsible advice.

20. We concluded that the learned judge's decision could not be allowed to stand. Miss Yuen invited us to deal with the matter ourselves, if her submissions on the judge's exercise of discretion were accepted by the court. But Mr. Stone asked us, in those circumstances, to remit the matter to the judge for further consideration. We had no doubt that we had the necessary jurisdiction to do what Miss Yuen asked of us and, with only the pleadings to consider, we felt we were in as good a position as the judge to resolve the matter, with a consequent saving of time and expense.

21. We now turn to consider whether the appropriate time to determine whether the period of limitation has expired is (a) the date when the application to amend was made i.e. the date upon which the court was moved (29th September 1990) or (b) the date when the application was heard by the Master (15th April 1991). In neither of the cases cited in the Supreme Court Practice in paragraph 15/6/3 (Leicester Wholesale Fruit Market Ltd. v. Grundy [1990]1 WLR 107 and Grimsby Cold Stores Ltd. v. Jenkins and Potter (1985) Const. LJ 362) did this very question arise for consideration. While both cases make it clear that the date of the issue of the original writ is not the determinative date, they do not discuss or decide what should be the position when the relevant limitation period has not expired when the summons applying for leave to add a party has been taken out, but has expired by the time the application comes on for hearing or the court announces its decision.

22. There is, perhaps, some measure of support for the submission that proposition (a) is sounder in law than proposition (b) in a decision of this court: Wo Fung Paper Making Factory Ltd. v. Sappi Kraft (Pty) Ltd. [1988]2 HKLR 346, however we take the view, in the absence of clear legislative provision or of binding authority, that the appropriate date for a consideration of limitation questions in circumstances such as the present must be the date the application is made (in the sense that it is filed in court) for reasons which seem to us too obvious to elaborate. We would mention only the anomalies which could arise if proposition (b) were the true position in law. As Miss Yuen fairly asks, what if the application is part-heard within the limitation period, but concluded after the period has expired? And could the right of a plaintiff seeking to add a defendant be dependent upon whether the judge gives an extempore judgment within the limitation period, or reserves judgment to a date outside that period? Of course, if an application is made before the limitation period has expired, and the applicant himself drags his heels in moving the court or in taking any necessary steps, then the court will consider whether the exercise of its discretion should be affected by the resultant delay.

23. It is only necessary for us to add, on this aspect of the case, that we do not consider that anything said by the House of Lords in Ketteman v. Hansel Properties Ltd. [1987] AC 189 stands in the way of the plaintiff's application, for the reasons clearly stated in the following passage from: Limitation Periods by Andrew McGee, 1980, pp.349-350 (we omit the footnotes):

"    An issue which has caused a great deal of difficulty in this area is the so-called 'relation back' theory. Controversy arose over the effect of allowing an amendment to the pleadings. One view was that such amendment took effect only from the date on which it was made. The alternative theory was that the amendment was restrospective, and related back to the date which the pleading bore on its face. In Ketteman v. Hansel Properties the House of Lords decided that the former of these views was the correct one. However, that case was decided under the Limitation Act 1939, and section 35 of the 1980 Act differs in important ways from section 28 of the 1939 Act. Specifically, it provides that where a new claim is brought other than by way of third party proceedings, that claim is treated for limitation purposes as a separate action and is deemed to have begun on the date on which the original action commenced. Therefore, in actions governed by the 1980 Act the Ketteman rule is no longer valid, though in actions governed by the 1939 Act, which must at the present date already be very rare, the Ketteman rule is still good law."

24. The relevant parallel provisions in our Limitation Ordinance, Cap. 347, are to be found in s.35(1) (b), read with subsection (2) (b).

25. This was clearly an action for money lent. Paragraph 663 of Vol. 28 of Halsbury's Laws of England, 4th Ed., states that :

"    In an action for money lent, if a time is specified for repayment or any condition for repayment, other than mere demand, is imposed, the statute of limitation runs on the expiration of the time specified or on the happening of the condition. If no time is specified the statute runs for the date of the loan."

26. According to the pleading the last settlement date was 30th September 1984 and so we accept Miss Yuen's submission that the cause of action accrued upon the failure of the defendants to repay the plaintiff on that day.

27. It is well settled that the day upon which the cause of action accrues must be disregarded in calculating the running of time. Thus time began to run from 1st October and so the plaintiff was not time barred when he took out his application (on 29th September 1990).

28. In the light of our conclusion that the position regarding limitation must be judged at the date the application to add the new defendants is lodged with the court, it is not necessary for us to decide what would have been the position as at 15th April 1991, when the Master granted leave, and therefore to consider Miss Yuen's compelling alternative arguments.

29. It was for these reasons that we allowed the appeal and restored the Master's order dated 15th April 1991.

30. Before taking leave of this appeal, we would once again draw the attention of practitioners to the importance we attach to compliance with the Practice Direction (6.3) about the timely provision of lists of authorities. We have to say that neither party to this appeal fulfilled their obligations under the Direction.