CHAN YUEN YEE v. CHAN CHUCK KWONG AND ANOTHER

HCMP 2994/2002

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

MISCELLANEOUS PROCEEDINGS NO. 2994 OF 2002

____________

____________

_______________

J U D G M E N T

_______________

1. The plaintiff (Ms Chan) seeks to amend the statement of claim consequent upon a change in the factual circumstances following the issue of the Originating Summons in these proceedings. The factual amendments, and an amendment to the prayer for relief seeking an order for sale pursuant to the Partition Ordinance Cap 352, (the Ordinance), are opposed.

2. The facts are largely not in dispute. The claim arose in the following way. Ms Chan was the judgment creditor of the 1st Defendant, Mr. Chan Chuck-kwong, (Mr Chan), in the sum of $500,000.00. Based upon the judgment she obtained and registered a charging order, over the interest of Mr. Chan, in a property in Lai King Wan, (the property), which was, prior to 11 September 1997, jointly owned by Mr Chan and the 2nd Defendant, (Ms Lo). On 11 September 1997, Deputy District Judge Carlson, (as he then was), ordered that Mr Chan and Ms Lo should hold the property in the ratio of 20% to Mr Chan and 80% to Ms Lo.

3. Ms Chan wished to enforce the charging order in order to recover the sum due. She began these proceedings by Originating Summons on 31 July 2002, and on 10 April 2003 the Master ordered that the proceedings continue as if begun by writ. Although Mr Chan was the owner of only 20% of the property, an order for sale of the whole property was sought by Ms Chan in the Originating Summons. On 5 April 2004 Mr Chan assigned his 20% interest in the property to Ms Chan. That assignment has been registered in the Land Registry. Ms Chan has consequently become the owner of 20% of the property.

4. Ms. Chan's acquisition of an direct interest in the property gives rise to rights in her pursuant to the Ordinance, which did not exist in her, prior to 5 April 2004. One of those rights is the right under s 6 of the Ordinance to seek an order for sale when physical partition of property appears to the court not to be beneficial to the persons interested in the land. It is clear from the decision of Reyes J in Fortis Bank Asia HK v Kam Hoi Herman & Anor (unreported HCMP 134/2002, 2004 HKCU Lexis 226), that prior to the acquisition of the direct interest in the property any rights Ms Chan had pursuant to the charging order were not sufficient to allow her to invoke the provisions of the Ordinance.

5. Ms Lo opposes the proposed amendments pleading the fact of the assignment of the 20% interest in the property to Ms Chan, and for an order for sale under the Partition Ordinance on the ground that those amendments seek to introduce a cause of action that did not exist at the date of the issue of the writ. It is beyond argument that that cause of action did not exist when the proceedings began.

6. It is unfortunate that, in recent years, in the course of the courts in Hong Kong considering the question of amendment resulting in the adding of a new cause of action, which has arisen subsequent to the issue and service of a writ of summons, not all of the relevant authorities have been cited and considered at the same time. It is also unfortunate that while the relevant references to the issue in Hong Kong Practice 2004 have been co-ordinated, the authorities have not been carefully analysed and accordingly the commentaries are in conflict.

7. In HKP § 18/9/1 the following statement is made:

"A cause of action accruing after the date of the issue of the writ cannot be included in a pleading without the consent of the parties to the action: Wing Siu Co Ltd. v Goldquest International Ltd [2003] 2 HKC 64 CA."

8. A similar view was expressed by the Court of Appeal in Lark International Finance Ltd v Lam Kim Marisa & Anor [2000] 4 HKC 688. In both of these decisions the court placed reliance upon the old English decision of Eshelby v Federated European Bank [1932] 1 KB 254 (DC).

9. In HKP § 20/8/6 the well-known principle is stated that:

"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 proceedings or of correcting any defect or error in any proceedings."

The decision in G.L. Baker Ltd v Medway Building & Supplies Ltd [1958] 1 WLR 1216 is cited together, with similar expressions of view from older authorities. The following statement is also made, relying upon the decision at first instance in Woo Suk King v Lam Lee Yuet Ho Lilian [1995] 3 HKC 701:

"Amendment may be allowed in respect of new causes of action which have accrued since the issue and service of the writ of summons."

The statements in § 18/9/1 and § 20/8/6 are therefore in direct conflict.

10. This case raises that conflict. Mr Pao, in a strongly argued case, says that the statements in Lark International and Wing Siu are obiter and that accordingly the court is free to follow English authority, which he says would allow the amendment. Mr. Man, while correctly acknowledging the technical nature of the point taken, argues equally strongly, that I am bound by both decisions.

11. There is no doubt at all that, apart from authority, there is nothing on the face of O. 20 R. 5 that prevents a new cause of action being added by amendment, even if the new cause arose only after the issue and service of the writ. It is particularly unfortunate that in none of the Hong Kong decisions does it appear is that the attention of the court has been drawn to the decision of Jacob J in Beecham Group plc v Norton Healthcare Ltd & Anor [1997] FSR 81 in which the court held that:

"Leave to amend a writ to add a cause of action not in existence at the time of the issue of the writ could be granted provided that (i) cause of action in the original writ was valid time of issue, and (ii) the new cause of action was valid at the application for leave to amend. The rules are sufficiently general and flexible to accommodate such amendments."

12. The basis of Jacob J.'s decision is one of common sense. He describes the point as "no more than a technical quibble". His view was that any injustice that might arise by a difference in costs could be dealt with by the trial judge at the conclusion of the trial, or by an order that leave to amend could be granted on the basis that any liability for costs in respect of the added cause of action should be treated on the basis that the claim was made only from the date that the cause of action was added. After considering Vax Appliances Ltd v Hooper Plc [1990] RPC 656 and Roban Jig & Tool co Ltd. v Taylor [1979] FSR 130 the judge allowed the amendment because he saw no reason why the power under O. 20 r. 5 did not extend to adding a fresh cause of action to a writ which was not incurably bad in itself.

13. Attractive although Mr. Pao's submission is, that as the issue in Lark International was whether the defendant had had a fair trial, and that therefore the point relating to the amendment did not directly arise, and accordingly the statements of Keith JA are obiter, I cannot agree. The issue as to whether the amendment was proper was central to the decision as to whether the defendant had had a fair trial. The only real criticism that can be made of the decision is that in the appeal the defendant was not represented and accordingly the court did not have the advantage of argument from both sides. Consequently neither Woo Suk King nor Beecham were cited to the court.

14. Mr Man contended that the decision in the Court of Appeal in Wing Siu was authority in the Hong Kong for the proposition that an amendment introducing the cause of action which has arisen following the issue of the writ is not permitted. I have reluctantly come to the view that it is authority for the absolute prohibition of such an amendment. The correct ratio of that case is, in my view, to be found in paragraph 17 at p. 70 in which the following statement is made:

"The distinction which was thus drawn by the Court of Appeal in the case appears to be between permitting an amendment which allows the real dispute in the case to be determined and one which introduces into the action a cause of action which could be said to be incurably bad because it did not exist at the date of the original claim. Both Ward LJ and Chadwick LJ in (Maridive & Oil Services SAE v CAN Insurance Co (Europe) Ltd [2002] Lloyds Rep 9) expressed the view the that there should be a flexible attitude dependent on the justice of the case."

15. Woo Suk King was not referred to by the Court of Appeal in Wing Siu, but as it was referred to in the judgement appealed from, (see Wing Siu Co Ltd. v Goldquest International Ltd No 1. [2002] 4 HKC 408, Ma J.), the court must have been aware of it. However they did not expressly overrule it or hold it to be wrongly decided. It appears that Beecham was not cited.

16. Mr. Man recognised that it may be argued that the English authorities, when referring to that which was "incurably bad", may have been referring to an original writ with an "incurably bad" cause of action, in the sense that the original writ simply did not disclose a cause of action. But it is clear that Rogers JA did not view the authorities use of the expression in that way. It is clear from paragraph 17, p. 70 of the judgment that when Rogers JA makes a reference to "incurably bad" he is of the view that the new cause of action is incurably bad because it did not exist at the time of the issue of the writ.

17. By way of completeness I record that in Ip Man Sha Henry & Anor v Ching Hing Construction (No. 2) [2003] 1 HKC 256, Deputy Judge Lam, (as he then was), expressed a tentative, and plainly obiter view that he was bound by Lark International. In Fong Yock Yee v Hong Kong Chung Shan Lung Chan Clan Association (unreported, HCA 2883/2003), Muttrie DJ, in the context of amendments to a counterclaim, was of the view that the English practice as disclosed in Vax, (and followed in Beecham), was not the law in Hong Kong. The judge cited Lark International and Wing Siu as expressing the law in Hong Kong. The contrary view was taken, before the decisions in Lark International and Wing Siu, by Suffiad J, in Chau Chik Yee v New Arctic Properties and Tam, (unreported, HCA 14305/97), where the judge followed Woo Suk King.

18. Mr Man was obliged to concede that were the amendment refused there is nothing at all to prevent Ms Chan issuing a new writ seeking an order for sale under the provisions of the Partition Ordinance. That being the case it simply cannot be argued for Ms. Lo that she is in any way prejudiced, except as to costs in the action commenced by way of Originating Summons, which likely now will not proceed any further. Whether in these proceedings, or in separate proceedings, she will face a claim under the Partition Ordinance. In the present circumstances therefore, her objection amounts to nothing more than a "technical quibble", which, as Jacob J pointed out in Beecham, p 93, only has the effect of imposing unnecessary delay, cost and expense on Ms Chan in obtaining an order for sale property to which she now appears to be plainly rightfully entitled.

19. It is easily argued that to allow the amendment is completely sensible and consistent with the modern approach to the principles of case management underlying litigation today. There is no prejudice to Ms Lo that cannot be compensated in costs, in the manner suggested by Jacob J in Beecham. But I am bound by the decisions of the Court of Appeal, no matter how sensible I may, in a particular case, find a particular course of action. I hold that the statement in HKP § 20/8/6, relying on Woo Suk King is wrong. In the circumstances the application for amendment must be declined.

20. Ms. Chan will now have to issue new proceedings to assert her rights under the Partition Ordinance. Mr. Man acknowledged that he probably could not oppose consolidation of the two sets of proceedings, recognizing that they both deal with the same issues. In all of the circumstances I am of the view that the issue of costs is best dealt with at the conclusion of all the proceedings between the parties. Costs are accordingly reserved.