SUNNY WORLD DECORATION AND DESIGN CO. v. MA MING YAN t/a YAN WING HONG

HCA 836/1996

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

ACTION NO. 836 OF 1996

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D E C I S I O N

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1. This is the Defendant's application for leave to amend his defence and counterclaim. The Plaintiff commenced this action on 19 January 1996 claiming the payment of $2,976,177 from the Defendant. The Plaintiff alleges that that sum was due and owing by virtue of an account stated contained in or evidence by a document dated 19 October 1995 and signed by the Defendant. The said sum was said to be in respect of goods and services supplied by the Plaintiff.

2. The defence and counterclaim dated 22 January 1997 denies the claim and contends that:-

(a) the document dated 19 October 1995 was singed by the Defendant under duress;

(b) further, the Plaintiff has breached an agreement reached between him and the Defendant as a result of which the Defendant has suffered loss and damage. The Defendant counterclaims for those loss.

3. The trial of this action commenced on 5 July 2000. By the time when Mr Wu for the Defendant made his formal application to amend the defence and counterclaim, the Plaintiff has adduced all his evidence and was about to close his case. I should say in fairness to the Defendant that there was an earlier indication at the beginning of the trial that an application to amend would be made later. There are mainly 2 matters sought to be put forward in this application:-

(a) amendments to paras 13, 14(5), 15(2), 16(3) and 22(4) (the application in relation to para. 21(3) has been withdrawn);

(b) the addition of a schedule of special damages to the counterclaim.

Mr Wu for the Defendant accepts that the application was made at a very late stage but contends that no new matters have been raised and no prejudice should be occasioned to the Plaintiff. Mr Tsang for the Plaintiff argues to the contrary.

4. It is common ground between the parties that the agreement made between the Plaintiff and the Defendant was in essence a management agreement. The Plaintiff was to supervise and co-ordinate the decoration work of the other contractors to be performed on hotel/ commercial premises owned by a joint venture to which the Defendant was a partner. It is also common ground that there were totally 7 contractors including a Kam Ming Design and Decoration Company and a Ming Fai Decoration (Equipment) Company. For this reason, I agree with Mr Wu's contention that the proposed amendments to paras 13 and 15(2) of the defence and counterclaim do not by themselves involve raising new matters. I also do not consider that the Plaintiff should be prejudiced by these proposed amendments.

5. The proposed amendments to paras 14(5), 16(3) and 22(4) are inter-related. In essence, the Defendant now seeks to allege that the Plaintiff was responsible for procuring, completing and/or expediting commodities inspections in the mainland in respect of materials/ equipments for use in the decoration work and the Plaintiff failed to perform or discharge this duty; as a result the Defendant has suffered loss. The Defendant also seeks to allege that the loss was as contained in an auditor's report dated 17 July 1996.

6. The main argument advanced by Mr Wu for saying that new matters have not been put forward is that the evidence in support of these proposed amendments can be found in self-explanatory documents which were disclosed by the Defendant long time ago. With respect to Mr Wu, I do not agree. It may be true that such documents were disclosed long time ago. However, the purpose of pleadings in civil litigation has to be borne in mind. One of them is to enable litigants to know well in advance the case which the other side is advancing. If litigants were allowed to put forward matters contained somewhere in the documents disclosed without the need to properly plead them, the other side will be burdened with the sometimes impossible task of having to sieve through documents and to try to decipher whether any (and if so what) materials may be relevant to point(s) which has/have been (or will be) raised by the side which has not properly pleaded its case.

7. On the contrary, I agree with Mr Tsang that this late application has prejudiced the Plaintiff in that he has been deprived of a proper opportunity to meet the new matters. This applies especially to the proposed schedule of special damages. Para. 35(1) of the counterclaim avers:-

"By reason of the aforesaid [breach of the agreement by the Plaintiff], the Defendant ... has suffered substantial loss and damage, particulars whereof will be supplied as soon as the same can be supplied and/or are available."

8. Despite this averment, items (g) to (j) thereof were never raised before. Items (a) to (f) thereof, though mentioned in the witness statement of the Defendant dated 30 December 1999, were never pleaded or particularised. There was also no indication in the witness statement as to what materials would support this part of the Defendant's case.

9. I agree with Mr Tsang's argument that the Plaintiff should be able to meet only the case pleaded by the Defendant and no more. I also agree with his argument that if the matters had been properly pleaded earlier, the Plaintiff could have prepared expert evidence on matters like the value of the work or the mainland law regarding arbitration. Furthermore, it would appear from one of the documents sought to be relied upon by the Defendant to support the proposed amendments, namely, the auditor's report dated 11 July 1996 that further undisclosed materials might be involved.

10. For the above reasons, save as to the proposed amendments to paras 13 and 15(2), this application is refused.