DAYS INTERNATIONAL LTD v. NIZARALI ESMAIL JESSA AND ANOTHER

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JUDGMENT

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Preliminary

1. The defendants in this action make two applications. The first seeks leave to amend their defence and counterclaim in the manner which has been set out in the amended pleadings which were attached to the summons. The second, that the dates fixed for trial of the action, namely 5th November onwards, should be vacated and new dates should be allocated.

2. The original writ and statement of claim were issued on 6th May, 1983, leave having been given on 5th May to serve out of the jurisdiction. The plaintiff,a Hong Kong company, claims substantial sums against the two defendants, who were at the relevant time carrying on business in Zaire, for goods sold and delivered by the plaintiff to the defendants during the period from January to October 1982.

3. Defence in the action was only entered on 4th January, 1984, after a ruling by Jones, J. that the action should proceed is Hong Kong, application having been made to stay it, on the ground that parallel proceedings had been instituted in Canada, the country in which the two defendaits are now resident.

Effect of amendments

4. The amended pleadings introduce various new matters of considerable importance. They allege that there was an oral agreement between one of the defendants and a representative of the plaintiff in February 1982, the effect of which was that the goods to be supplied by the plaintiff  to the defendants should be on a cost plus basis, the plaintiff charging only 10% more than its original supplier had charged it.

5. As an important rider to this amended ground of defence, it is said that the defendants are unable to provide particulars of the amounts of overcharging until there has been discovery of the invoices which illustrate the transactions between the original supplier and the plaintiff.

6. The amended defence also seeks to give some degree of credit to the plaintiff for various payments not taken into account in the plaintiff's favour in the earlier defence.

7. There is a further important new allegation, introduced by the amended defence, that there has been an infringement of trade marks on many of the goods supplied by the plaintiff and that as a result of this illegality, the plaintiff is unable in law to sue on those consignments.

8. There is also an assertion that some of the goods supplied had to be destroyed by the Zaire customs, and that nevertheless the defendants were obliged to pay duty upon them to the Zaire customs.

9. There is also a denial that, in signing a document which had been described as a statement of account, which was said to contain admissions by the defendants as to their liability to the plaintiff, the document is enforceable since it was only signed by the second defendant.

10. These substantial new issues must inevitably have a considerable effect on the length, complexity and course of the action.

When are amendments allowed

11. The general principles governing amendments of pleadings are set out in the White Book at p.340. I quote the classical statement, of the correct approach of a court, of Bowen, L.J. in Cropper v. Smith⁽¹⁾ -

12. It is also clear from other passages in the White Book that amendments will not be allowed if to do so would cause substantial hardship to the other parties or prejudice them to a degree to which cannot be fairly compensated for by the payment of costs.

13. It is true that these very substantial amendments are sought at a fairly late stage in the proceedings, though as Mr. Rodway has properly said, it is by no means uncommon for amendments to be made even later, certainly at the opening of the trial and sometimes in the course of it, though this is an undesirable course and frequently gives rise to the need for adjournments at that stage.

14. The defendants have, in the lengthy affidavits which have been submitted on their behalf, put forward explanations of why these amendments are sought now rather than at a considerably earlier stage. It is apparent that they have been faced with difficulties in obtaining instructions and in preparing their case.

15. I see nothing in the evidence which is before me in those affidavits which would suggest that this application is intended as a delaying tactic or that it is mala fide. It is not for me at this stage to attempt to assess the worth of the amended defence.

Objection

16. Mr. Faulkner, on behalf of the plaintiff, has resisted both limbs of the application. He has argued that the lateness of the application necessarily puts the plaintiff under a substantial disadvantage in that it now has to meet a very different case from the one which it had prepared itself to deal with.

17. Furthermore, he argues that the amendments which have been put forward have not been properly formulated. In support of this argument, he drew my attention to a passage in the White Book, at p.339, which says -

18. There is a reference to Derrick v. Williams⁽²⁾, Hyams v. Stuart King⁽³⁾, and J. Leavey & Co. v. Hirst⁽⁴⁾.

19. However, the following sentences in that paragraph of the White Book, seem to me to indicate that the sense of the opening sentence of that paragraph is only that the court will require that amendments which are sought shall be reduced into writing and that the court will not merely give permission for a general amendment of pleading.

20. The third of these cases, J. Leaves & Co. v. Hirst ⁽⁴⁾, is perhaps an illustration of the principle which I derive from this paragraph. In that case evidence was allowed to be led during the trial to establish frustration, a defence which had not been pleaded. The Court of Appeal ruled that where a substantial departure from the pleadings is desired, it is the duty of the Judge to see that a proper application is made to amend the pleadings, and that where such an application is made the proposed amendment should be reduced to writing and submitted.

21. That certainly has been done here. With the exception of two matters to which I will refer in a moment, the proposed amendments appear to me to satisfy the requirement that amendments should be properly and exactly formulated.

22. There are two respects in which Mr. Faulkner argues that the amendments fall short of the particularity which is required. Firstly, that  the paragraph, which refers to an infringement of Zaire law, contains no reference to the specific Zaire law which is said to have been infringed.

23. The necessary reference is now available and can be inserted in the pleadings by a simple amendment. I see no reason why this obstacle should not be overcome by the granting of leave for the amendments being made conditional upon that paragraph of the defence being altered to show the appropriate provisions of Zaire law.

24. The other criticism referred to the amended paragraph 5(iv), in which the defendants assert that they are unable to provide particulars of the amounts overcharged until further discovery.

25. Mr. Faulkner objected strongly to the allowance of this amendment, on the ground that it was a fishing expedition and that, in any event, it lacked the degree of particularity required at this stage.

26. Given the nature of the allegation put forward by the defendants in paragraph 5 of the amended pleading, it is difficult to see how, until there has been specific discovery of the invoices for the supply of goods by the original supplier to the plaintiffs, the defendants could be in a position to assess the amount by which they have been overcharged.

27. I do not think this is an unusual kind of pleading. There must be many situations in which a party, while satisfied that something is owing to him, is unable to particularize the amount until he has access to documents which are entirely in the possession of the other party.

28. The second limb of Mr. Faulkner's objection was that, even if an allegation of that kind were acceptable in the early stages of an action, a higher duty lies upon a party, if he seeks to obtain leave for an amendment at a late stage in an action, He referred me to Order 18 rule 12 which deals with the general obligation that lies on all parties to include in a pleading the necessary particulars of any claim, defence or other matter. This is a general obligation but he could not direct me to any authority for the proposition that the duty under Order 18 rule 12 becomes a stiffer one, according to the stage in an action at which a pleading is submitted.

29. Mr. Faulkner finally argued, as an objection of general principle, that the allowance of the amendment sought, although he hoped that it would be possible for the action to continue on 5th November, would be very likely to cause a not insubstantial delay in the trial of the matter and that this was prejudicial to the plaintiff. He added that the longer it was before judgment was obtained, the less likely it was that a judgment, if obtained by the plaintiff, would ever be satisfied, in view of evidence, which appears in the affidavits, to the effect that the defendants are already moving their money about.

30. I find it difficult to give much weight to this argument. Even accepting that it is the intention of the defendants to move their money about so that a judgment could not be enforced against them, it would be simple enough for those with a knowledge of the international markets, and the pleadings and evidence suggest that the defendants are familiar with them, to move his money at short notice beyond the reach of a bailiff.

31. As Mr. Rodway has rightly submitted, this is not likely to be an easy action and it has proceeded in Hong Kong at a respectable pace.

Conclusion

32. I think that the amendments sought by the defendants should be allowed with the one variation to which I referred earlier, namely, that the appropriate paragraph of the amended defence should be altered to contain a reference to those provisions of Zaire law on which the defendants propose to rely. Leave to amend will be conditional on that additional amendment being made within 7 days. The plaintiff will have leave to amend his reply.

33. So far as the trial of the action is concerned, in my view it would be unrealistic to expect it to continue within the next two weeks. Although the plaintiff understandably wishes to go ahead, I cannot see, the amendments having been allowed, that it would be possible to avoid applications for further adjournment on the first day, with the consequential waste of time and money involved. So I think that the defendants must also succeed on the second part of their application, namely, that the trial of the action be adjourned.

Costs

34. I think the costs of the two issues have to be separated. So far as the first issue is concerned, leave to amend the defence, there will be an order for the plaintiff to have in any event the costs thrown away by reason of leave being given for the amendments sought.

35. Costs occasioned by the vacation of the trial dates to be reserved to the trial judge.

(1)    [1884] 26 Ch. D. 710.

(2)    55 T.L.R. 676

(3)    [1908] 2 K.B. 724

(4)    [1944] K .B. p. 27