UPPLAN CO LTD v. LI HO MING AND ANOTHER

HCA 1915/2009

[2019] HKCFI 2273

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

ACTION NO. 1915 OF 2009

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(By Original Action)

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(By Counterclaim)

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D E C I S I O N

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1.  I deal firstly with the costs of the Summons filed on 8 May 2019 by the Defendants (in the original action). It is the only live issue because the institution and continuation of this action have been ratified as a result of the actions taken by Upplan after the PTR on 28 May 2019.

2.  Let me say at the outset, and with respect, that I find that the conduct of these proceedings to be lacking.  It is common ground that the challenge to Upplan’s authority to bring these proceedings was raised at the outset and yet no action was taken by either side to remedy the situation or to bring a proper application to have the issue determined by the court.

3.  Although it is unfortunate that the Summons was only filed at a very late stage, one cannot escape the conclusion that the issue would have to be adjudicated by the court (it is one of the issues in the List of Agreed Issues).

4.  Dealing briefly with the many arguments advanced on behalf of Upplan, firstly, I see no adequate reason to take the view that the Defendants were precluded from challenging the authority in question by reason of election or delay.  In particular, the authority of Liquidation Committee of Foshan Hongda Development Ltd v East Legend Investment Ltd [2009] 1 HKLRD 169 is distinguishable in that the defendant in that case had clearly accepted the authority of the substituted plaintiff after having considered the merits of its substitution application.  In any event, this court would be obliged to look into the matter when the issue had been raised. 

5.  As regards any alleged prejudice to Upplan, it is very difficult to be sympathetic to such suggestion given that the challenge was raised at the outset.  Further, the fact of the matter is that Upplan was able to and had remedied the deficiency.

6.  Finally, on the submission that the defect was curable, the events show that Upplan had failed to take any action in that regard, and would not have done so but for the Summons.

7.  For these reasons, I see no good reasons not to award costs to the Defendants when the Summons had led to the resolution of an important issue in this case.  I also grant a certificate for 2 counsel in favour of the Defendants.

8.  Moving on to the Defendants’ application to amend their Defence and Counterclaim, it is of course highly undesirable for such an issue to be raised at this late stage.  I have already mentioned my misgivings about the conduct of these proceedings.

9.  On the other hand, it is trite that the primary consideration is to allow the real issues in controversy to be determined and to dispose of these matters between the parties fairly.

10.  The disputed amendments are confined to two.  Firstly, in respect of the additional plea of estoppel, namely, para 8.22A of the draft Re-amended Defence and Counterclaim, it is an issue of law and despite the lateness of the application I see no real prejudice on the part of Upplan in dealing with it.  It is therefore allowed.

11.  Secondly, in respect of paras 9.15A and 9.15B, these pleas seek to introduce a contention that Upplan’s business could not have continued beyond 30 May 2012 in any event.  Whilst I accept that they raise a new issue which is not found in the List of Agreed Issues, it is true that they are based on the witness statements filed by the Defendants in August 2012 and April 2018.  It is a difficult balance whether to allow these amendments at such a late stage.  However, on their face, the pleas involve relatively simple factual matters and I see no adequate reason to believe that Upplan will not be able to address them by way of supplemental evidence.  I therefore also allowed this amendment.

12.  I shall hear the parties on the consequential directions and costs of this application.