KWOK LAU CHU v. KWOK CHI YAU AND ANOTHER

HCA 3197/2016

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

ACTION NO 3197 OF 2016

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DECISION

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1.  This is an appeal by the Plaintiff against Master S Kwang’s decision dated 24 May 2017 whereby the learned Master ordered that pursuant to the Defendants’ Summons dated 14 March 2017:

  (a) The Plaintiff’s Statement of Claim herein be struck out and the Plaintiff’s action herein be dismissed on the ground of abuse of process and the action being vexatious and frivolous;

  (b) The registration of the Writ of Summons herein in the Land Registry against Sections C, D, E and the Remaining Portion of Lot No 76 all in D.D. No 101, Yuen Long, New Territories (“the Land”) by Memorial No 16120702100018 be vacated; and

  (c) Costs of the action including costs of the Defendants’ Summons filed on 14 March 2017 be to the Defendants to be assessed gross sum on a full indemnity basis with Certificate for one counsel. 

2.  By the Defendants’ Summons dated 14 March 2017, the Defendants sought to strike out the whole of the Statement of Claim and to have the Plaintiff’s action dismissed on the following grounds:

  (a) Abuse of process, including but not limited to:

  (i) Res judicata regarding HCMP 4550/2003 and CACV 260/2014 (“the Previous Proceedings” and “the Appeal” respectively).

  (ii) The action herein being financed by a third party.

  (b) The action herein being vexatious and frivolous.

3.  At the beginning of the hearing, Mr Li SC, for the Defendants, informed the court that the Defendants no longer rely on the ground that this action is being financed by a third party and their grounds are restricted to what is normally called Henderson v Henderson abuse, or the doctrine of res judicata in the wider sense and this action being vexatious and frivolous.

4.  Before analysing the Plaintiff’s Statement of Claim in detail, it is important to understand the historical development leading to the commencement of the present action. 

History of the present action

5.  Most of the history of the present dispute was covered by Mr Justice A Chan in his judgment in Gotland Enterprises Limited v Kwok Chi Yau and Others HCMP 4550/2003, unreported, 25 November 2014 (“the Judgment”) at paragraphs 3 – 38 and the subsequent Court of Appeal’s judgment, CACV 260/2014, unreported, 19 January 2016 (“the CA Judgment”) at paragraphs 6 – 13.

6.  The Plaintiff is the father of the 1^st Defendant and Kwok Shi Hing (“Hing”).  The 2^nd Defendant is a company owned by the 1^st Defendant and his wife. 

7.  The Plaintiff had been farming fish and rearing ducks in various ponds in northwestern New Territories.  Since around the early 1980s, the Plaintiff and the 1^st Defendant (and others) farmed fish and reared ducks (“the Business”) on or around the Land.  The Plaintiff and the 1^st Defendant were and are not the registered and paper title owners of the Land.  Before the assignment to the 2^nd Defendant of part of the Land as discussed below, the registered and paper title owner of the Land was Gotland Enterprises Limited (“Gotland”).

8.  Since around the early 1990s, the Plaintiff and the 1^st Defendant became the only two remaining participants of the Business.  Later, in around the late 1990s, the Plaintiff retired completely from the Business and the 1^st Defendant continued to run the Business on his own.  In the Judgment, it was found that the Plaintiff retired in 1999, when he was 65 years old. 

9.  In 2003, Gotland, the then registered and paper title owner of the Land, commenced the Previous Proceedings to recover vacant possession of the Land.  The 1^st Defendant was named as the 1^st Defendant in the Previous Proceedings for the obvious reason that he was the occupier of the Land.  The Plaintiff was not named as a defendant. 

10.  The 1^st Defendant defended Gotland’s claim on the ground of adverse possession claiming that he was the sole adverse possessor of the Land. In the course of the Previous Proceedings, the Plaintiff came to be joined as a party to the proceedings on the basis that the 1^st Defendant, who had allegedly agreed to defend Gotland’s claim on behalf of the Plaintiff, claimed himself to be the sole owner of the Land. 

11.  On 6 July 2011, the Plaintiff was joined as the 5^th Defendant in the Previous Proceedings. 

12.  On joining as the 5^th Defendant in the Previous Proceedings, the Plaintiff claimed that he was the sole adverse possessor of the “relevant” portion of the Land.  He made no claim to certain parts of the Land, mainly those on the eastern tip, in his claim of adverse possession.  The land over which the Plaintiff did claim adverse possession is referred to as Land in Dispute (as used in the Defendants’ affirmations).  The Plaintiff further counterclaimed against the 1^st Defendant that he solely owned the possessory interest of the Land in Dispute. 

13.  In the Previous Proceedings, it was the 1^st Defendant’s case that the Plaintiff, upon his retirement, relinquished whatever interest he might have had in the Land to the 1^st Defendant.  The Plaintiff ran a competing case against the 1^st Defendant.  The Plaintiff’s case was that despite his retirement from the Business, he remained the sole owner of the Land in Dispute and that he rented it to the 1^st Defendant and Hing.  The rent paid by the 1^st Defendant to the Plaintiff was HK$3,000 per month.

14.  It is fair to say that it had always been the Plaintiff’s case, both in the Previous Proceedings and in the Appeal, that all along he was the sole owner of the Land in Dispute having adversely possessed the same.  At all material times, the Plaintiff was legally represented.

15.  The trial of the Previous Proceedings took place in September 2013 but was adjourned to October 2014 because of amendment of pleadings.

16.  In around August 2014, before the trial was resumed, the 1^st Defendant, through the 2^nd Defendant purchased the Land in Dispute (but not other parts of the Land) from Gotland.  In return, the 1^st Defendant gave up its claim of adverse possession for the other parts of the Land that fall outside the Land in Dispute. 

17.  The sale and purchase agreement between the 2^nd Defendant and Gotland was dated 28 August 2014 and the Assignment was dated 29 August 2014.  The purchase price was HK$11 million.  The Land in Dispute, which both the Plaintiff and the 1^st Defendant claimed sole adverse possession, became the subject matter of dispute in the Previous Proceedings.

18.  The exact geographical scope of the Land in Dispute can be seen from the coloured parts in the plan as attached to the Judgment.  The abbreviation “Land” used in the Judgment is the same as the Land in Dispute.  However, in the present action, the Plaintiff, as can be seen from the Statement of Claim, is making a claim with respect to the Land and not just the Land in Dispute. 

19.  Soon after the transfer of the Land in Dispute by Gotland to the 2^nd Defendant, Gotland took out a summons dated 5 September 2014 which was served on, amongst others, the Plaintiff’s then solicitors, Messrs Wong & Associates, asking for an order that Gotland cease to be a party to the Previous Proceedings.  Gotland’s application was supported by an affirmation of Yu Wai Ha Connie filed on 5 September 2014, giving an account of the sale and assignment of the Land in Dispute by Gotland to the 2^nd Defendant.  Gotland’s summons was duly heard on 19 September 2014 and the Plaintiff was represented by counsel at the hearing.

20.  Meanwhile, by a substitution order dated 12 September 2014, the 2^nd Defendant became the plaintiff in the Previous Proceedings in replacement of Gotland.  In other words, the Previous Proceedings became a contest between the Plaintiff and the 1^st Defendant as squatters and the 2^nd Defendant as the paper title owner.

21.  The resumed trial took place between 6 and 21 October 2014 for a total of 8 days.  The Plaintiff was then represented by a senior counsel leading two junior counsel.  Mr Justice A Chan had to decide on two issues, namely:

  (1) Whether the Plaintiff and/or the 1^st Defendant had established adverse possession over the Land in Dispute.

  (2) If so, whether the Plaintiff or the 1^st Defendant had the possessory interest. 

22.  By the Judgment, Mr Justice A Chan found that neither the Plaintiff nor the 1^st Defendant had established adverse possession over any part of the Land in Dispute and ordered vacant possession of the Land in Dispute to the 2^nd Defendant. 

23.  The Plaintiff appealed against both findings.  His case was that he was the sole adverse possessor of the Land in Dispute.  In the hearing of the Appeal, the Plaintiff abandoned his claims to parts of the Land in Dispute.  Paragraph 4 of the CA Judgment reads:

“ 4. In this appeal by the 5^th Defendant, by the time when the matter was argued before us, he confined the appeal to the two ponds together with the bunds surrounding the same in the Land. Adopting the nomenclature of the parties, we shall call them Pond 1 and Pond 2 respectively.”

24.  The Plaintiff’s appeal was dismissed by the Court of Appeal on 19 January 2016.  The Plaintiff had not appealed against the judgment of the Court of Appeal.

25.  About one year after the judgment of the Court of Appeal, in around December 2016, the 1^st Defendant intended to cause the 2^nd Defendant to mortgage the Land in Dispute in order to finance his intended purchase of Gotland’s shares as he wanted to acquire an adjacent piece of land (i.e. Lot 76G) which was then under the name of Gotland. 

26.  The 1^st Defendant was then told by the mortgagee that the writ of summons of the present action had been registered against the Land in Dispute and hence the mortgage application could not go through. 

27.  The writ of the present action was issued on 7 December 2016.  There was no demand letter or pre-action letter to the Defendants before the Plaintiff commenced the action herein and registered the writ against the Land in Dispute. 

28.  The writ of summons was only served on the Defendants’ solicitors, Messrs Tony Kan & Co by the Plaintiff’s solicitors, Messrs Wong Hui & Co who also acted for the Plaintiff in the Appeal on 28 December 2016.  The writ was served after Messrs Tony Kan & Co had written twice to Messrs Wong Hui & Co objecting to the action and the registration of the writ. 

29.  The Defendants then took out the Defendant’s Summons to strike out the Plaintiff’s Statement of Claim and to dismiss this action on 14 March 2017.

The Plaintiff’s case in the present action

30.  Against this background, it is apposite now to set out the Plaintiff’s claims in the present action.  In the Statement of Claim, the Plaintiff now pleads:

“ 2. In the Previous Proceedings, the 1^st Defendant set up a possessory title over the Land by way of defence and counterclaim. The Plaintiff only joined in as a defendant on 6^th July, 2011 and became the 5^th defendant therein. Upon the Plaintiff’s joinder as aforesaid, a dispute arose between the Plaintiff as the 5^th defendant and the 1^st defendant as the 1^st defendant in the Previous Proceedings as to whether the claim to a possessory title over the Land, if established belonged to one of them solely to the exclusion of the other, or to both of them jointly in equal shares.

3. In a judgment handed down on 25^th November, 2014, Mr. Justice Anthony Chan made the following findings of facts in the Previous Proceedings which are material to the cause of action in this action:

3.1 The Plaintiff and the 1^st Defendant were equal partners in the fish farming and duck farming business operated at the Land for a number of years until the Plaintiff retired from the partnership business in 1999.

3.2 After the Plaintiff’s retirement, the 1^st Defendant continued to carry on business at the Land; and through his wife, he paid rent to the Plaintiff’s share of interest in the Land as the partnership asset.

3.3 There was an agreement in writing dated 23^rd May 2007 signed by the 1^st Defendant under which he agreed to contribute to the Plaintiff’s half share of the costs of defending the Previous Proceedings as one of the Plaintiff’s children whilst he was solely responsible for defending the Previous Proceedings.

3.5. The possessory title, if established, would belong to the Plaintiff and the 1^st Defendant in equal shares.

4. By reason of the facts pleaded in Paragraphs 3.1 and 3.2 above, the relationship of partners between the Plaintiff and the 1^st Defendant continued to subsist with regard to the holding of the partnership asset, that is the use and occupation of the Land and the exercise of the right of possession over the same (“Partnership Asset”). Further, in agreeing and allowing the 1^st Defendant to defend the Previous Proceedings on the behalf of the Plaintiff as an interested party, the Plaintiff had entrusted the 1^st Defendant to protect his interest in the Partnership Asset. As such, the 1^st Defendant stood in a fiduciary relationship of trust and confidence with the Plaintiff in defending the Previous Proceedings and owed a fiduciary duty to the Plaintiff.

5. The 1^st Defendant acted in breach of his fiduciary duty to the Plaintiff as particularized below.

PARTICULARS OF BREACH

(a) During the course of defending the Previous Proceedings on behalf of the Plaintiff’s interest, the 1^st Defendant attempted to dishonestly claim the Plaintiff’s half share in the Partnership Assets as his own. This resulted in the joinder of the Plaintiff as the 5^th Defendant on 6^th July 2011.

(b) The 1^st Defendant’s opportunity of purchasing the Land from Gotland Enterprises Limited at the price of 411 million was available to him in the course of the Previous Proceedings in which he defended the Plaintiff’s interest in the Partnership Asset. Without any consent of the Plaintiff, the 1^st Defendant purchased the Land in the name of the 2^nd Defendant as his alter ego.

(c) Upon the acquisition of the Land by the 2^nd Defendant, the 1^st and 2^nd Defendant acted in tandem in the Previous Proceedings through Counsel notwithstanding the 2^nd Defendant’s interest as the owner of the Land and the interest of the Plaintiff and/or the 1^st Defendant as alleged adverse possessor(s) were diametrically in conflict. The 1^st Defendant therefore acted in conflict of interest as fiduciary of the Plaintiff.

6. By reason of the 1^st Defendant’s breaches of trust and/or fiduciary duty as aforesaid, the 2^nd Defendant as the 1^st Defendant’s nominee holds on constructive trust for the Plaintiff, and is liable to account to the Plaintiff for one half share of the Land, subject to payment of contribution by the Plaintiff towards the costs of acquisition to be ascertained upon inquiry and taking accounts.” (Emphasis added.)

31.  First, there is a distinction between the Land and the Land in Dispute. There was no application for amendment of the Statement of Claim before Master S Kwang and this court.  At the hearing, this court specifically asked Mr Wong, for the Plaintiff, whether the present Statement of Claim, without amendments, could stand against this striking out application, Mr Wong answered this court in the affirmative. 

32.  Secondly, it is simply incorrect for the Plaintiff to plead the matters underlined in paragraphs 2 and 3 of the Statement of Claim.  There are no findings of facts by Mr Justice A Chan on the matters pleaded in paragraphs 3.1, 3.2 and 3.5 of the Statement of Claim.  Paragraph 98 of the Judgment reads:

“ 98. I am equally unimpressed with D5’s case that he had sole possession of the Land. It is common ground that the fish farming and duck rearing businesses were conducted as an equal joint venture between him and D1 (ignoring for the present purpose the participation of Fung and Kwai). They shared the profits and losses, and were entitled to share the Government compensation paid for the cessation of the duck rearing operation. There is simply no reason to believe that the interest in the land should be treated different. Indeed, there is hardly any evidence adduced from D5 as to why he had sole interest in the Land. I believe that the truth is that any interest which D1 and D5 might have over the Land belonged to them jointly in equal shares.” (Emphasis added)

33.  The last sentence of paragraph 98 of the Judgment is clearly not a finding of facts by Mr Justice A Chan that:

  (a) the Plaintiff and the 1^st Defendant were equal partners;

  (b) the 1^st Defendant paid rent to the Plaintiff for the Plaintiff’s share of interest in the land as the partnership asset; and

  (c) the possessory title, if established, would belong to the Plaintiff and the 1^st Defendant in equal shares. 

34.  Indeed, the clear finding of fact by Mr Justice A Chan is that both the Plaintiff and the 1^st Defendant’s claims for possessory title to the Land failed.  Both of them did not have any possessory interest in the Land.  Hence, it cannot be right for the Plaintiff to plead that “[b]y reason of the facts pleaded in Paragraphs 3.1 and 3.2 above, the relationship of partners between the Plaintiff and the 1^st Defendant continued to subsist with regard to the holding of the partnership assets, that is the use and occupation of the Land and the exercise of right of possession over the same (‘Partnership Asset’).”  There is simply no finding of the existence of any Partnership Asset by Mr Justice A Chan.  It is wrong to plead a case in such manner. 

35.  Further, as Mr Li SC rightly pointed out, the Plaintiff had never in the Previous Proceedings and in the Appeal asserted or claimed that somehow he had half interest in the Land in Dispute arising out of the fact that he had been in the Business with the 1^st Defendant.  It is correct that the Plaintiff never argued before Mr Justice A Chan and the Court of Appeal that he held possessory interest in the Land in Dispute or any Partnership Asset jointly in equal shares with the 1^st Defendant.  The Plaintiff’s case had always been that he was the sole adverse possessor of the Land in Dispute.  His pleaded case in paragraphs 16 and 17 of his Counterclaim against the 1^st Defendant reads:

“ 16. The 5^th Defendant obtained exclusive possession of the Land and continuously enjoyed such possession to the date thereof as the sole individual acquiring possessory title over the Land after adverse possession of the Land for over twenty years prior to the commencement of this action by the Plaintiff.

17. Possessory title of the Land therefore vest with the 5^th Defendant alone.”

36.  Given that there had not been any finding of fact as pleaded in paragraphs 3.1 and 3.2 of the Statement of Claim, in particular, there was no finding of fact in relation to “the Plaintiff’s share of interest in the Land as the partnership asset”, it is hard to see how any fiduciary relationship in relation to the protection of the Plaintiff’s interest in the Partnership Asset as pleaded in paragraph 4 of the Statement of Claim can arise when no such Partnership Asset exists.  I agree with Mr Li SC’s submission that given Mr Justice A Chan’s finding that neither the Plaintiff nor the 1^st Defendant had established adverse possession vis-à-vis the title owner, it is simply impossible for Mr Justice A Chan to have made any finding that the Land in Dispute or any interest therein was an asset of any partnership. 

37.  I have no doubt that “the Plaintiff’s share of interest in the Land as the partnership asset” as pleaded in the Statement of Claim refers to the Plaintiff’s possessory interest in the Land in Dispute which Mr Justice A Chan has found to be non-existent.  Hence, there was no Partnership Asset to be protected by the 1^st Defendant in his fiduciary capacity, even if the relevant fiduciary relationship is established. 

38.  During the hearing, Mr Wong, for the Plaintiff, advanced an argument that the Plaintiff’s interest in the Land was a limited one entitling him to possession as against other trespassers.  In Halsbury’s Laws of England 5^th Ed 2015, Vol 97 at paragraph 574, the learned editors stated:

“ Any form of possession, so long as it is exclusive and exercised with the intention to possess, is sufficient to support a claim of trespass against a wrongdoer. It is not necessary, in order to maintain trespass, that the claimant’s possession should be lawful, and actual possession is good against all except those who can show a better right to possession in themselves.” (Emphasis added.)

39.  Mr Wong also referred this court to the case of Graham v Peat (1801) 1 East 244 for the same proposition of law.  However, I agree with Mr Li SC that this argument is irrelevant as, first, this new formulation of Partnership Asset is not pleaded and is inconsistent with a claim for a full proprietary interest in the Land as presently advanced in the Statement of Claim.

40.  Secondly and more importantly, this argument is bad as a matter of law as such limited interest was based on actual possession which the Plaintiff no longer had since his retirement in 1999.  Indeed it was the Plaintiff’s own pleaded case in the Previous Proceedings that “from about 1999 onwards, the 5^th Defendant retired and the 1^st Defendant took over of the 5^th Defendant’s farming business”, thus any partnership would have been dissolved as from 1999. 

41.  I also have no doubt that paragraphs 5(a) and 5(c) of the Statement of Claim should be struck out because they are matters which could and should have been ventilated in the Previous Proceedings.  Mr Li SC’s submission is that the whole of the Statement of Claim should be struck out as it is an abuse of process of the court by reason of the wider doctrine of res judicata and/or by reason that the claims are frivolous and vexatious. 

Abuse of Process — Henderson v Henderson

42.  As a matter of principle, the abuse issue should first be determined.  In Chiang Lily v Secretary for Justice [2009] 6 HKC 234, Ma CJHC (as he then was), at paragraph 47 said:

“ 47. For my part, it is first necessary to determine the abuse issue. If leave ought to have been refused on account of the proceedings constituting an abuse, then the court should not, as a matter of principle, deal with any other issue, even accepting (for present purposes) that the relevant issue may be one of importance. It would be wrong for a court to deal with other issues if it came to the conclusion that the proceedings were an abuse. To do so would largely play into the hands of the party in default and provide an unfortunate precedent whereby despite the existence of abuse, the court nevertheless continued with the proceedings as if the abuse never occurred. Such an approach would mean that the court might also be asked to adjudicate on the merits of a case in the hope, if not expectation, that if they were good, the abuse might somehow be overlooked when, as a matter of principle, abuses ought not be. Obviously, circumstances may dictate a different approach but in the present case, it would have been more appropriate to have dealt with the abuse first.”

43.  This form of abuse is derived from Henderson v Henderson (1843) 3 Hare 100, in particular, from the speech of Sir James Wigram V-C at 114-115:

“ …where a given matter becomes the subject of litigation in, and of adjudication by, a Court of competent jurisdiction, the Court requires the parties to that litigation to bring forward their whole case, and will not (except under special circumstances) permit the same parties to open the same subject of litigation in respect of matter which might have been brought forward as part of the subject in contest, but which was not brought forward, only because they have, from negligence, inadvertence, or even accident, omitted part of their case.”

44.  This form of abuse is also referred to as the wider doctrine of res judicata as it applies not only to issues already decided by the court in previous proceedings but also to “every point which properly belonged to the subject of the litigation, and which the parties, exercising reasonable diligence, might have brought forward at the time”: Henderson v Henderson at 115.

45.  In Ko Hon Kee v Chiu Pik Yuk (2012) 15 HKCFAR 72, Ma CJ, at paragraphs 82 and 83 said:

“ 82.  The abuse that is known as the Henderson v Henderson abuse (or res judicata in the wider sense — the nomenclature is not important) is derived from the case of that name.  It has been developed and explained by the House of Lords in Johnson v Gore Wood & Co. (a firm) [2002] 2 AC 1, by the Judicial Committee of the Privy Council in Yat Tung Investment Co. Ltd. v Dao Heng Bank and Brisbane City Council v Attorney General for Queensland [1979] A411, by the English Court of Appeal in Bradford and Bingley Building Society v Seddon [1999] 1 WLR 1482 and by our Court of Appeal in Ngai Few Fung v Cheung Kwai Heung [2008] 2 HKC 111 and Chiang Lily v Secretary for Justice [2009] 6 HKC 234.  The essence of the doctrine is that a party ought generally not be permitted to raise in subsequent proceedings matters which that party could and should have raised in earlier proceedings.

83.  For reasons that will become evident presently, it is unnecessary in order to resolve this part of the appeal to go into the precise ambit of the principles regarding this form of abuse, although for my part, I would say that the present state of the law is reflected by the decision of the House of Lords in Johnson v Gore Wood and of the Court of Appeal in Chiang Lily v Secretary for Justice.  For present purposes, it is sufficient just to refer to the following facets of the doctrine:

(1) The starting point is to recognize that the doctrine is founded on an abuse of process.  As Lord Wilberforce said in Brisbane City Council v Attorney General for Queensland, “it ought only to be applied when the facts are such as to amount to an abuse: otherwise, there is a danger of a party being shut out from bringing forward a genuine subject of litigation”: at 425.

(2) This concern (that a party ought not lightly be deprived of the right to have serious matters litigated) was echoed by Lord Milletin Johnson v Gore Wood: at 59D-G.

(3) It must therefore be essential when striking out a claim on this basis (and thus preventing a litigation of that claim) that an abuse is found to exist in seeking to raise in subsequent proceedings claims or issues which could and should have been raised in earlier proceedings.  This abuse will usually take the form of the other party being “vexed” (or in some cases, the terms “oppressed”, “unjustly harassed” or “unjustly hounded” are used) by the subsequent set of proceedings: Johnson v Gore Wood at 31A-B.

(4) The abuse can also take the form of the administration of justice being brought into disrepute: see Chiang Lily at 256D-G (para 58) referring to Hunter v Chief Constable of the West Midlands Police [1982] AC 529.  With the procedural reforms introduced by the Civil Justice Reform in 2009, the courts in Hong Kong must now, when exercising their procedural powers, increasingly bear in mind not just the parties before them in any particular litigation but also the position of other litigants in the court process.  RSC O.1A r.1(f) states as one of the underlying objectives of the court’s procedural powers under the Rules to be “to ensure that the resources of the court are distributed fairly”.

(5) In examining aspects such as abuse, the court is concerned with balancing interests: not just those of the litigants before it, but also taking into account the other interests involved in the administration of justice.  It is important therefore here to emphasise that when the court is dealing with the Henderson v Henderson type of abuse, it is not looking at an absolute bar to litigation such as issue estoppel or cause of action estoppel.  On the contrary, in considering this type of abuse, the court is required to assess a number of factors and balance competing interests.  See here, Bradford and Bingley Building Society at 1490F-H.  It is also worth making the following observations at this juncture:

(a) There is conceptually an important distinction between absolute bars such as issue estoppel and the type of abuse with which we are concerned.  In the former situation, the party who seeks to re-litigate an issue or cause of action has already had his day in court, whereas in the latter situation, that party has not: cf Johnson v Gore Wood at 59D (“It is one thing to refuse to allow a party to re-litigate a question which already been decided; it is quite another to deny him the opportunity of litigating for the first time a question which is not previously being adjudicated upon” per Lord Millett).

(b) The assessment of different factors and balancing competing interests can be said to be an exercise of a discretion.  A number of decisions of the English Court of Appeal have cast doubt on whether the court does indeed exercise a discretion as such: see Aldi Stores Ltd. v WSP Group Plc. [2008] 1 WLR 748, at 762C-D (para 16) and Stuart v Goldberg Linde (a firm) [2008] 1 WLR 823, at 845E-846C (para 81).  It is unnecessary for present purposes to decide whether or not a discretion is actually being exercised.  The more important point to bear in mind is that an appellate court is obliged to pay sufficient regard to the decision of the court below and should be reluctant to interfere where the decision is based on the assessment or balancing of a number of factors.  Nothing in the two said cases suggests otherwise; in fact, quite the contrary.”

46.  In Healthy Living Products International Ltd v Murray [2012] 1 HKLRD 49, at paragraphs 40 – 43, Fok JA (as he then was) said:

“ 40.  It was not disputed that the Deputy Judge correctly identified the relevant legal principles engaged.  As noted above, the Deputy Judge cited the judgment of this court in Ngai Few Fung v Cheung Kwai Heung at §16 in which Cheung JA set out the rationale of the Henderson v Henderson principle as explained by Lord Bingham in Johnson v Gore Wood & Co (a firm), namely:

‘ (1) The principle is to serve public interest in that there should be finality in litigation and that a party should not be twice vexed in the same matter.

(2) This is reinforced by the current emphasis on efficiency and economy on the conduct of litigation, in the interests of the parties and the public as a whole.

(3) The onus is on the party alleging abuse.

(4) The bringing of a claim or the raising of the defence in later proceedings may, without more, amount to abuse if the court is satisfied that the claim or defence should have been raised in the earlier proceedings if it was to be raised at all.

(5) It is, however, not necessary, before abuse may be found, to identify any additional elements such as a collateral attack on a previous decision or some dishonesty. But where those elements are present, the later proceedings will be much more obviously abusive.

(6) There will rarely be a finding of abuse unless the later proceeding involves what the court regards as unjust harassment of a party.

Per Lord Bingham of Cornhill at p 90.’

41. The Deputy Judge also cited Cheung JA’s reference (in Ngai Few Fung v Cheung Kwai Heung at §17) to the emphasis in Lord Bingham’s speech in Johnson v Gore Wood & Co (a firm) which was that:

‘ It is, however, wrong to hold that because a matter could have been raised in earlier proceedings it should have been, so far as to render the raising of it in later proceedings necessarily abusive. That is to adopt too dogmatic an approach to what should in my opinion be a broad, merits based judgment which takes account of the public and private interests involved and also takes account of all the facts of the case, focusing attention on the crucial question whether, in all the circumstances, a party is misusing or abusing the process of the court by seeking to raise before it the issue which could have been raised before. As one cannot comprehensively list all possible forms of abuse, so one cannot formulate any hard and fast rule to determine whether, on given facts, abuse is to be found or not.’

[Emphasis in italics in Cheung JA’s judgment]

42. As Mr Bell pointed out, that emphasis is also reflected in Lord Millett’s speech in Johnson v Gore Wood & Co (a firm) where he said:

‘ It is one thing to refuse to allow a party to relitigate a question which has already been decided; it is quite another to deny him the opportunity of litigating for the first time a question which has not previously been adjudicated upon. This latter (though not the former) is prima facie a denial of the citizen’s right of access to the court conferred by the common law and guaranteed by article 6 of the Convention for the Protection of Human Rights and Fundamental Freedoms (1953).

…

In so far as the so-called rule in Henderson v Henderson suggests that there is a presumption against the bringing of successive actions, I consider that it is a distortion of the true position.  The burden should always rest upon the defendant to establish that it is oppressive or an abuse of process for him to be subjected to the second action.’

43. Mr Bell also referred to Ngai Few Fung v Cheung Kwai Heung at §22, where Cheung JA noted that:

‘ … the true basis of the Henderson or Yat Tung principle is based on abuse of process. This being the true basis of the principle then one can see immediately that it is not permissible to adopt a mechanistic approach by simply saying that since the cause of action or defence could have been raised in an earlier proceedings then it should have been so raised so that the subsequent raising of those issues in the later proceedings will necessarily become abusive.’ ”

47.  I am of the view that Cheung JA’s caution that the court must not adopt a mechanistic approach is the guiding principle.  As Lord Bingham of Cornhill in Johnson v Gore Wood & Co [2002] 2 AC 1 at 31C-E said:

“ It is, however, wrong to hold that because a matter could have been raised in earlier proceedings it should have been, so as to render the raising of it in later proceedings necessarily abusive. That is to adopt too dogmatic an approach to what should in my opinion be a broad, merits-based judgment which takes account of all the facts of the case, focusing attention on the crucial question, whether, in all the circumstances, a party is misusing or abusing the process of the court by seeking to raise before it the issue which could have been raised before. As one cannot comprehensively list all possible forms of abuse, so one cannot formulate any hard and fast rule to determine whether, on given facts, abuse is to be found or not.” (Emphasis added.)

48.  One has to go back to the public policy behind the doctrine which is to balance the public interests in having finality in litigation and efficient administration of justice (Johnson v Gore Wood & Co (supra) at 31A) against the right of parties to have serious matters litigated.  (Ko Hon Yue v Chiu Pik Yuk (supra) at paragraph 83(1) and (2) per Ma CJ).  Otherwise, there is a danger of a party being shut out from bringing forward a genuine subject of litigation (per Lord Wilberforce, Brisbane City Council v Attorney General for Queensland [1979] AC 411 at p 425).

49.  Hence, the court adopts a cautious and two-stage approach in determining this kind of abuse:

  (a) First, whether in all the circumstances the action concerned is an abuse of process in the sense that it could and should have been raised in earlier proceedings.  It is now firmly settled that “could have” and “should have” are two distinct elements.  Both have to be demonstrated by the party alleging the abuse.  (Chiang Lily v Secretary for Justice (supra) at paragraph 57)

  (b) Second, whether there are any special circumstances to justify allowing the action concerned to proceed despite the abuse. 

50.  The court has to consider all the circumstances of the action in order to decide whether the action concerned is an abuse of the process.  From previous case authorities, the following considerations have been examined:

  (a) It is not necessary to establish that the second action is a collateral attack on previous decision or that dishonesty is involved in the commencement of the second action.  However, the presence of these elements will render the second action much more obviously abusive.  (Johnson v Gore Wood & Co (supra) at 31B-C per Lord Bingham of Cornhill)

  (b) The substantive merits of the second action should have no bearing on whether it constitutes an abuse, in particular, where the defendant’s complaint is that the claim is a weak one.  If the plaintiff’s claim is hopeless, it could be struck out as bound to fail or that no reasonable cause of action existed.  But that would be a separate and distinct ground different from the second action being an abuse of process.  (Stuart v Goldberg Linde (a firm) and others [2008] 1 WLR 823 per Lloyd LJ at paragraph 57, concurred by Sedley LJ at paragraph 75 and Sir Anthony Clarke MR at paragraph 85).

  (c) Delay on the part of the plaintiff in bringing the second action is equally irrelevant to the question of abuse.  (Stuart v Goldberg Linde (a firm) and others (supra) per Lloyd LJ at paragraph 58, concurred by Sedley LJ at paragraph 75 and Sir Anthony Clarke MR at paragraph 85).

  (d) Discovery of new information material to the formulation of the plaintiff’s claim shortly before the trial of the first action is a relevant consideration.  (Stuart v Goldberg Linde (a firm) and others (supra) per Lloyd LJ at paragraphs 52 – 55 and 68)

  (e) Resiling from position previously taken is a relevant consideration.  In Chiang Lily v Secretary for Justice (supra) at paragraph 78, Ma CJHC (as he then was) said:

“ …I would observe that there is something inherently unattractive in a party resiling from a position taken in earlier proceedings and then seeking to recurrent it in later proceedings. When one adds to this the delay and disruption that is caused where there are, as in the present case, underlying criminal proceedings, the position is very much aggravated. It would, in my view, be an affront to the administration of justice were this permitted to happen unless exceptional circumstances exist to justify such a situation. None, in my view, exists in the present case.”

  (f) Ignorance of the law and/or failure of legal advisers are irrelevant considerations. In Chiang Lily v Secretary for Justice (supra) at paragraph 69, Ma CJHC (as he then was) said:

“ …I am aware that in certain circumstances, this may be a factor to excuse a failure to comply with court orders…but where an abuse is found to exist, I found it difficult to conceive that the failure of a legal adviser can somehow excuse that abuse. The failure of one’s legal adviser should hardly affect the question of whether there has been an abuse. The remedies of a party in such a situation lie elsewhere than in being permitted to proceed with a set of proceedings which constitute an abuse of the court’s process” (See also paragraphs 81 – 82)

ANALYSIS

51.  Applying the above legal principles to the claims as set out in the Statement of Claim, first, it is very obvious to this court that the Plaintiff’s case on the Partnership Asset is based on the incorrect basis that there was a partnership found by Mr Justice A Chan.  This is a false premise as both Mr Justice A Chan and the Court of Appeal found that neither the Plaintiff nor the 1^st Defendant, whether individually or collectively, had any possessory interest in the Land in Dispute.  I have ruled that the Plaintiff did not have any lesser right vis-à-vis trespassers since 1999 as he did not have actual occupation of the Land in Dispute. 

52.  Secondly, insofar as any reliance on the currently pleaded partnership is concerned and the matters pleaded in paragraph 5(a) and 5(c) of the Statement of Claim, I am of the firm view that the Plaintiff could have raised the partnership issues in the Previous Proceedings as he must have knowledge of whether there was such a partnership or not.  If the Plaintiff was indeed not the sole adverse possessor of the Land in Dispute, he could have raised the issue either by abandoning his claim of being the sole alleged adverse possessor or by simply adding an alternative claim that there was a partnership between him and the 1^st Defendant, and that the same subsisted notwithstanding his retirement from the business of the partnership. 

53.  Thirdly, as a matter of policy, I do not think that it is right to allow the Plaintiff to run an inconsistent case by the present action, when the Plaintiff must know whether there existed a partnership and whether he had any interests and/or rights over the Land in Dispute at least as from 6 July 2011, when he joined as a defendant and made a counterclaim against the 1^st Defendant in the Previous Proceedings.  I have no doubt that the claims that “the 1^st Defendant attempted to dishonestly claim the Plaintiff’s half share in the Partnership Asset as his own” and “upon acquisition of the Land by the 2^nd Defendant, the 1^st and 2^nd Defendant acted in tandem in the Previous Proceedings through Counsel notwithstanding the 2^nd Defendant’s interest as the owner of the Land and the interest of the Plaintiff and/or 1^st Defendant as alleged adverse possessor(s) were diametrically in conflict” could have been raised in the Previous Proceedings. 

54.  Indeed, Mr Wong, for the Plaintiff, advanced no credible reason as to why the issues of partnership and Partnership Asset could not have been raised in the Previous Proceedings. 

55.  As to the question of whether the Plaintiff should have raised the issue of partnership and Partnership Asset in the Previous Proceeding, the answer is a clear yes to me.  In the Previous Proceedings, the subject of the litigation is interest in the Land in Dispute.  The issues of partnership and Partnership Asset go to the root of the issue in the Previous Proceedings, that is, whether the Plaintiff or the 1^st Defendant owned any possessory title or interest in the Land in Dispute.  I have no doubt that the issues of partnership and Partnership Asset should have been raised in the Previous Proceedings.  (Barnett: Res Judicata, Estoppel and Foreign Judgments at paragraphs 6.32, 6.33 and 6.84)

56.  The Plaintiff relies on three special circumstances:

  (1) he had not been so advised;

  (2) he thought it would not be necessary to do so as he could prevail in his adverse possession claim; and

  (3) he did not want any adjournment due to his advanced age. 

57.  I have no hesitation in dismissing the first reason because it is quite clear that the fact that he had not been so advised is not a relevant consideration (See Chiang Lily v Secretary for Justice (supra) at paragraphs 69, 81 – 82 per Ma CJHC (as he then was)).  Mr Li SC submitted that this reason is not credible, but whether it is credible or not is not relevant.  Insofar as necessary, I agree that the Plaintiff could not possibly have missed the point about the alleged partnership and Partnership Asset when the whole dispute between the Plaintiff and the 1^st Defendant in the Previous Proceedings was who owned the possessory interest in the Land in Dispute. 

58.  Indeed, Mr Wong for the Plaintiff referred this court to the Plaintiff’s pleading in the Previous Proceedings where the Plaintiff pleaded that “The 5^th Defendant agreed with the 1^st Defendant that the latter was entitled to 50% of the net income arising from the duck farming at the 1^st Area.  The 5^th Defendant would be entitled to the remaining 50%.” and “Subsequently, after the acquisition of the 2^nd Area by the 5^th Defendant, he also operated a duck and fish pond thee in the 2^nd Area.  Net income thereof was shared between him and the 1^st Defendant.” It is, therefore, quite clear that if the Plaintiff would like to run a case based on the alleged partnership and Partnership Asset, he could and should have done so.  He chose not to and it would not be right to now allow him to litigate the issue of partnership and Partnership Asset in this new action.

59.  I can well see the Defendants’ legitimate concern that they should not be “vexed” or “unjustly harassed” by the present set of proceedings after having fight the same subject matter of competing interest in the Land in Dispute in the Previous Proceedings all the way up to the Court of Appeal.  (Ko Hon Kee v Chiu Pik Yuk (supra) at paragraph 83(3) per Ma CJ).  There should be finality in litigation.

60.  As far as the second reason is concerned, if the Plaintiff thought it would not be necessary to raise the points concerning the alleged partnership and Partnership Asset, as he could prevail in his adverse possession claim, then it is only fair that he now bears the consequences of his confidence in his claims in the Previous Proceedings.  On the other hand, it would not be fair to the Defendants to be vexed in litigation all over again simply because the Plaintiff chose not to raise something he could and should have raised before but chose not to do so.

61.  As for the third reason that he did not want any adjournment due to his old age, first, I do not see any reason why raising the points concerning the alleged partnership and Partnership Asset could have caused any adjournment.  In fact, the Plaintiff could have and should have raised these issues as soon as he was joined as a party on 6 July 2011, there would not be any risk of adjournment.  In any event, the Plaintiff is now commencing a new action one year after his unsuccessful appeal to the Court of Appeal, so I do not see how his old age helps him on this particular issue.

62.  Mr Li SC also submitted that the new action amounts to a collateral attack on the Judgment and the CA Judgment and hence an abuse.  I agree that this is a relevant consideration that this court can take into consideration. 

63.  Mr Li SC also submitted that it is dishonest for the Plaintiff to run two inconsistent cases.  In the Previous Proceedings, his case, as confirmed by a statement of truth, was that he alone held the interest in the Land in Dispute.  In the present action, he again, by a statement of truth, confirmed that he only has half interest in the Land in Dispute.  The two claims are mutually exclusive or impossible in law.  (See Bradford & Bingley Building Society v Seddon [1999] 4 All ED 217 (CA) at 233b per Auld LJ) I would not say that the Plaintiff is dishonest, but the fact that he chooses to run two inconsistent facts is a relevant factor to take into consideration when determining the issue of abuse.  It is inherently unattractive to allow the Plaintiff to plead another version of facts in this action after his former and inconsistent version had been tried and disbelieved by the trial judge in the Previous Proceedings. 

64.  Mr Li SC also submitted that the Plaintiff is dishonest as he timed the issuing of the present action only in December 2016 when the 1^st Defendant was trying to arrange a mortgage.  It is the Defendants’ case that the Plaintiff knew about the intended mortgage and hence issued the present action to sabotage it.  The Defendants also submitted that there are strong indications that the Plaintiff is not prepared to pay costs to the Defendants even if he loses and is ordered to pay costs.  I do not find it necessary to decide these issues. 

65.  Taking into account all the circumstances of the case and the special circumstances relied upon by the Plaintiff, I have come to the view that the Plaintiff’s new claims based on the alleged partnership and Partnership Asset must be struck out as the same clearly constitute an abuse of process in the Henderson v Henderson sense. 

THE PLAINTIFF’S CONSTRUCTIVE TRUST CLAIM

66.  However, this is not the end of the matter.  During the course of submissions, Mr Wong for the Plaintiff ran an argument that the Plaintiff entrusted the 1^st Defendant to defend the Previous Proceedings on his behalf, and that the 1^st Defendant was the Plaintiff’s nominee. As such, the 1^st Defendant owed the Plaintiff a fiduciary duty to act in the best interest of the Plaintiff.  When the 1^st Defendant caused the 2^nd Defendant to purchase the Land in Dispute from Gotland, he breached the rule against conflicts of interest and his duty not to profit. As the knowledge of the 1^st Defendant could and should be imputed to the 2^nd Defendant (as the 1^st Defendant is the director of the 2^nd Defendant), both the 1^st and 2^nd Defendants now hold the Land in Dispute on constructive trust for the Plaintiff. 

67.  Mr Wong submitted that as the Plaintiff learnt of the 2^nd Defendant’s purchase of the Land in Dispute only about one month before the resumption of trial in October 2014, it is not an abuse for the Plaintiff to commence this new action.  Mr Wong relied heavily on the case of Stuart v Goldberg Linde (a firm) and others (supra). 

68.  Mr Li SC submitted that the truth is that the Plaintiff knew about the 2^nd Defendant’s purchase at least one month before the resumed trial by reason of the service on the Plaintiff of: (i) Gotland’s summons dated 5 September 2014 for ceasing to be a party; and (ii) the affirmation of Yiu Wai Ha Connie in support which referred to the sale of the Land in Dispute to the 2^nd Defendant.  The Plaintiff could well have and should have raised his constructive trust claim over the Land in Dispute as now formulated in the Previous Proceedings once he learnt about the 2^nd Defendant’s purchase. 

69.  Mr Li SC submitted that a cause of action is “simply a factual situation the existence of which entitles one person to obtain from the court a remedy against another person” (Hong Kong Civil Procedure 2017, Vol 1 at 15/1/2.  In Ho Sin Ying v Chan Yui Ling CACV 221/2013, unreported, 25 July 2014, Lam VP at paragraph 38 said:

“ In the authorities cited to us, the expression “cause of action” has never been understood as simply referring to the legal formulation of a claim.  Whilst the same set of underlying facts may generate different legal claims and a particular legal formulation of a claim may have different elements from another legal formulation, it is clear from the authorities that the cause of action is the underlying factual basis for a claim.”

70.  A plaintiff does not have a new cause of action just because, for example, he used to formulate his claim as “breach of contract” before but now formulates it as “negligence” based on the same set of underlying facts. 

71.  Mr Li SC submitted that the cause of action in the Previous Proceedings and the instant case is exactly the same, namely, the factual situation that the Plaintiff and the 1^st Defendant had used the Land in Dispute for some years allegedly entitling them to possessory interest in the Land in Dispute.  The factual situation being the same, the Plaintiff simply does not have a “new” cause of action no matter what and how he labels his claims in the present action. 

72.  I am of the view that in order to understand the Plaintiff’s constructive trust claim, it is important to first know how this claim is pleaded.  Three material paragraphs are paragraphs 4, 5(b) and 6 and they read as follows:

“ 4. Further, in agreeing and allowing the 1^st Defendant to defend the Previous Proceedings on the behalf of the Plaintiff as an interested party, the Plaintiff had entrusted the 1^st Defendant to protect his interest in the Partnership Asset. As such, the 1^st Defendant stood in a fiduciary relationship of trust and confidence with the Plaintiff in defending the Previous Proceedings and owed a fiduciary duty to the Plaintiff.

5(b) The 1^st Defendant’s opportunity of purchasing the Land from Gotland Enterprises Limited at the price of $11 million was available to him in the course of the Previous Proceedings in which he defended the Plaintiff’s interest in the Partnership Asset. Without any consent of the Plaintiff, the 1^st Defendant purchase the Land in the name of the 2^nd Defendant as his alter ego

6. By reason of the 1^st Defendant’s breaches of trust and/or fiduciary duty as aforesaid, the 2^nd Defendant as the 1^st Defendant’s nominee holds on constructive trust for the Plaintiff, and is liable to account to the Plaintiff for one half share of the Land, subject to payment of contribution by the Plaintiff towards the costs of acquisition to be ascertained upon inquiry and taking of accounts.” (Empahsis added.)

73.  I have asked Mr Wong for the Plaintiff whether he considered the above paragraphs good for the Plaintiff’s constructive trust claim and he answered in the affirmative. 

74.  The fiduciary duty as pleaded is restricted to the protection of the Partnership Asset only, which both Mr Justice A Chan and the Court of Appeal found to be non-existent. 

75.  If and only if the Plaintiff’s constructive trust claim is sustainable, the details of which will be addressed below, I am of the view that the pursuit of the constructive trust claim is not an abuse of process for two reasons.  First, in my judgment, the cause of action in relation to constructive trust did not complete until the 2^nd Defendant’s purchase of the Land in Dispute. Before the said purchase, there cannot be any constructive trust claim.  In fact, the major argument of the Plaintiff is that he was informed of the purchase about one month before the resumed trial and there was not enough time for him to make application for amendment of his counterclaim to add in the constructive claim.  I am of the view that a more fundamental issue is that this new cause of action did not exist at the time the writ was first issued for the Previous Proceedings. 

76.  It is true that the Plaintiff did allege in the Previous Proceedings that the 1^st Defendant was entrusted with the task of defending the Previous Proceedings on behalf of the Plaintiff, and that this formed the backbone of the Plaintiff’s present submission that the 1^st Defendant was in a fiduciary relationship with the Plaintiff.  However, insofar as the breach of fiduciary duty in August 2014 is concerned, such facts did not complete the cause of action, as they merely established the existence of a fiduciary relationship.  This cause of action was completed only when the 1^st Defendant purchased the Land in Dispute from Gotland through the 2^nd Defendant in August 2014. 

77.  It is well established that a court has no jurisdiction to grant leave to a plaintiff to amend a writ or pleading to include a cause of action which was not in existence when the writ was issued (Eshelby v Federated European Bank Ltd [1932] 1 KB 154).  As Keith JA stated in Lark International Finance Limited v Lam Kim Marisa and Another [2000] HKCA 311; [2000] 4 HKC 688 at paragraph 36:

“ It is well established that a statement of claim, whether indorsed on the writ or not, cannot be amended, without the defendant’s consent, whether with the leave of the court or not, where the effect of the amendment is to add a cause of action which accrued since the issue of the writ: see Eshelby v Federated European Bank Ltd [1932] 1 KB 254 (Swift J), Roban Jig & Tool Co Ltd v Taylor [1979] FSR 130 (Court of Appeal) and Chu and Chow Maritime SA (Panama) v Bulk Sea Transport (Neill J) (Times, 25 February 1984, unreported).”

78.  In Wing Siu Co Ltd v Goldquest International Ltd [2003] 2 HKC 64 at paragraph 18, the Court of Appeal confirmed that the rule in Eshelby v Federated European Bank Ltd continues to apply in Hong Kong in cases where the proposed amendment would introduce into the writ a cause of action which did not exist at the date of the issue of the writ.  This court is bound by the decision of the Court of Appeal. 

79.  In Telecommunications & Technology Asia (BVI) Limited v Outblaze Limited and Another HCA 2541/2009, unreported, 13 May 2011, Recorder A Chow, SC (as he then was) at paragraphs 16 – 20 said:

“ 16. It is well established in Hong Kong that a statement of claim cannot be amended to introduce a cause of action which was not in existence or had not yet accrued at the time of the issue of the writ: see Lark International Finance Ltd v Lam Kim Marisa [2004] 4 HKC 688; and Wing Siu Co Ltd v Goldquest International Ltd [2003] 2 HKC 64 (affirming the first instance decision of Ma J, as he then was, reported in [2002] 4 HKC 408), both being decisions of the Court of Appeal binding on me.

17. In Chan Yuen Yee v Chan Chuck Kwong [2005] 2 HKLRD 416, Deputy High Court Judge Saunders applied Wing Siu Co Ltd to disallow a proposed amendment to introduce a post writ assignment which gave the plaintiff the right to seek the relief sought in that action (namely, a sale under s.6 of the Partition Ordinance, Cap. 352).

18. In Lead Mile Ltd v Sino Peak Finance Ltd [2004] 4 HKC 646, Recorder Joseph Fok SC (as he then was) drew a distinction between the addition of a cause of action after the date of the writ (which the learned judge considered to be permissible) and an amendment to cure a defective claim by the addition of a plea of a necessary factual averment that could not be pleaded as at the date of the writ (which the learned judge considered not to be permissible).  It is not necessary for me to decide in this case whether it is permissible to add, by way of amendment, a cause of action not in existence as at the date of the writ (i.e. the first type of situation mentioned by the learned judge), and I express no view on this point.

19. The present case falls within the second type of situation mentioned by the Recorder in Lead Mile Ltd. For reasons mentioned above, the existing Writ and Statement of Claim are defective. The Deed of Assignment was not in existence as at the date of the Writ.  Thus, the Statement of Claim cannot be cured by the introduction of the Deed of Assignment by way of amendment, which I consider to be a necessary factual averment to support the Plaintiff’s cause of action in its personal capacity against the 1^st Defendant.

20. Mr Man has taken me through a line of English authorities (including Roban Jig & Tool Co Ltd v Taylor [1979] FSR 130; Vax Appliances Ltd v Hoover plc [1990] RPC 656; Hendry v Chartsearch Ltd [1998] CLC 1382; Maridive & Oil Services (SAE) v CNA Insurance Co (Europe) Ltd [2002] CLC 972) and submits, correctly in my view, that they cannot all be reconciled with the Hong Kong authorities mentioned above.  Mr Man also fairly accepts that the English position as it has now been developed is a reasonable way in which the law may be developed, but submits that I should follow the Hong Kong approach, as indeed I am bound to do so in view of the fact that both Lark International Finance Ltd and Wing Siu Co Ltd are decisions of the Court of Appeal in Hong Kong.  I may add that in Wing Siu Co Ltd, Ma J acknowledged, at paragraph 23 of his judgment, that the English High Court decision in Vax Appliances Ltd supported the proposition that causes of action which accrued only after the issue of a writ could be pleaded by way of amendment, but observed that it was for a higher court to overrule the clear effect of Lark International Finance Ltd. For my part, I consider that I should apply the law as it has been developed in Hong Kong.”

80.  As it was impossible for the Plaintiff to bring this constructive claim by way of amendment to the writ in the Previous Proceedings, the complaint of abuse of process falls away.  I do not consider that it would have been possible for the Plaintiff to apply for an amendment of the pleadings under Order 20, rule 5(5) of the Rules of the High Court.  The key question is whether the effect of the amendment would have been to introduce a new cause of action which arose out of the same facts or substantially the same facts as the earlier cause of action in the Previous Proceedings.  While what are “substantially the same facts” is necessarily a question of degree, I am of the view that the purchase of the Land in Dispute is a post-writ new fact but an essential element to the new cause of action. 

81.  Secondly and in any event, even if it was possible to introduce the new constructive trust claim by way of amendment to the writ in the Previous Proceedings, the Plaintiff only had knowledge of the 2^nd Defendant’s purchase of the Land in Dispute one month before the trial.  It is unrealistic to expect the Plaintiff to have completed the necessary amendments to the pleadings, discovery of relevant documents in relation to the purchase of the Land in Dispute and got himself ready for the trial of the new cause of action within one month.  In Stuart v Goldberg Linde (a firm) and others (supra), Lloyd LJ at paragraphs 55 and 68 said:

“ 55. By contrast, amendment of the statement of case to include the inducement claim would have transformed the whole proceedings, by introducing all sorts of issues (above all causation and loss) which were wholly irrelevant to the undertaking claim, and thereby expanding substantially the scope of the necessary evidence. The application for permission to amend could hardly have been brought on earlier than the case management conference or pre-trial review which was held on 20 December 2000. On the basis that the claimant would have put forward a fully pleaded amended particulars of claim, for which permission to amend could have been given, it would then have been necessary, if permission was granted, for the defendants to amend the defence and for the future case management to be reconsidered in the light of the amended statement of case. It seems to me inconceivable that the existing trial date in January 2001 could have been held. In that way Mr Linde’s reference in his witness statement to the derogatory remarks made by him to Mr Vardinoyannis, intended to provide the basis for an attack on the claimant’s credibility, would in addition have delayed the trial of the undertaking claim substantially. In my judgment the master’s reliance on this factor, and the judge’s endorsement of it, was incorrect.

68. I do not consider that it was incumbent on the claimant to seek to add the inducement claim to the 2000 action, because the facts came to his attention so late before the trial of the 2000 action, because to do so would (if successful) have delayed the trial of the 2000 action, and because of the disparity between the different claims, the undertaking claim being essentially summary and certainly relatively simple, and also relatively (at least by comparison with the other claims) speedy, and the other claims being much more complex in terms of issues and evidence, and therefore likely to take much more time to come to trial and at trial as well.”

82.  For the above two reasons, I do not consider the pursuit of the constructive claim an abuse of process in the Henderson v Henderson sense. However, that is again not the end of the matter.  This court still has to decide whether this constructive claim is frivolous and vexatious.

Frivolous and Vexatious

83.  The Defendants’ further ground to strike out the Statement of Claim and to dismiss this action is that the Plaintiff’s claims are frivolous and vexatious.  The general legal principles are set out in Hong Kong Civil Procedure 2017 Vol 1 at 18/19/7:

“ The object of the rule is to stop cases which ought not to be launched — cases which are obviously frivolous or vexatious, or obviously unsustainable.

A proceeding is frivolous when it is not capable of reasoned argument, without foundation or where it cannot possibly succeed. A proceeding is vexatious when it is oppressive and/or lacks bona fides.” (Emphasis added.)

84.  I am of the view that constructive trust claim as pleaded is obviously unsustainable and cannot possibly succeed.  Mr Li SC accepted that on the Plaintiff’s case the 1^st Defendant had agreed to defend his interest in the Previous Proceedings, and so the 1^st Defendant was arguably a fiduciary of the Plaintiff but only in that regard.  In Bristol and West Building Society v Mothew [1998] Ch 1, Millett LJ (as he then was) at p 18A said:

“ A fiduciary is someone who has undertaken to act for or on behalf of another in a particular matter in circumstances which give rise to a relationship of trust and confidence.”

85.  In Libertarian Investments Ltd v Hall [2013] 16 HKCFAR 681 Ribeiro PJ at paragraphs 60 – 68 said:

“ 60. The authorities show that a person attracts fiduciary duties where he undertakes an obligation to act in the interests of another.  As Mason J expressed it in Hospital Products:

‘ [An] entitlement to act in one’s own interests is not an answer to the existence of a fiduciary relationship, if there be an obligation to act in the interests of another. It is that obligation which is the foundation of the fiduciary relationship, even if it be subject to qualifications including the qualification that in some respects the fiduciary is entitled to act by reference to his own interests.’

61. Similarly, in Breen v Williams, Gummow J stated:

‘ Fiduciary obligations arise (albeit perhaps not exclusively) in various situations where it may be seen that one person is under an obligation to act in the interests of another.’

62. And in the Canadian Supreme Court, McLachlin J put it thus:

‘ The essence of a fiduciary relationship ... is that one party exercises power on behalf of another and pledges himself or herself to act in the best interests of the other.’

63. There are obviously many ways and many different contexts in which one may assume an obligation to act in another person’s interests, as Mason J pointed out:

‘ The categories of fiduciary relationships are infinitely varied and the duties of the fiduciary vary with the circumstances which generate the relationship. Fiduciary relationships range from the trustee to the errand boy, the celebrated example given by Fletcher Moulton LJ in his judgment in Re Coomber [1911] 1 Ch 723, in which, after referring to the danger of trusting to verbal formulae, he pointed out ... that the nature of the curial intervention which is justifiable will vary from case to case.’

64. Brennan CJ helpfully suggested that fiduciary duties arise in two broad, overlapping situations:

‘ Fiduciary duties arise from either of two sources, which may be distinguished one from the other but which frequently overlap. One source is agency; the other is a relationship of ascendancy or influence by one party over another, or dependence or trust on the part of that other.’

65. An obvious example of the “agency” type of situation giving rise to fiduciary duties involves the case where a person receives money or other property for and on behalf of or as trustee of another person.

66. That fiduciary duties may also arise out of a relationship of ascendancy was acknowledged by the Canadian Supreme Court in Galambos v Perez, where Cromwell J described such relationships as ‘power-dependency relationships’ involving a need for ‘the protection of one party against abuse of power by another’.

67. It is in the context of such “ascendancy” cases that the courts have identified as an essential feature of the fiduciary relationship, an obligation on the fiduciary to exercise discretionary powers in the interests of another, highlighting the vulnerability of that other person to any potential abuse of such powers.

68. In Hospital Products, one of the questions was whether the relationship between distributor and supplier was such a “power-dependency” relationship and it was in that context that Mason J stated:

‘ The critical feature of these relationships is that the fiduciary undertakes or agrees to act for or on behalf of or in the interests of another person in the exercise of a power or discretion which will affect the interests of that other person in a legal or practical sense. The relationship between the parties is therefore one which gives the fiduciary a special opportunity to exercise the power or discretion to the detriment of that other person who is accordingly vulnerable to abuse by the fiduciary of his position. The expressions ‘for’, ‘on behalf of’ and ‘in the interests of’ signify that the fiduciary acts in a ‘representative’ character in the exercise of his responsibility, to adopt an expression used by the Court of Appeal. It is partly because the fiduciary’s exercise of the power or discretion can adversely affect the interests of the person to whom the duty is owed and because the latter is at the mercy of the former that the fiduciary comes under a duty to exercise his power or discretion in the interests of the person to whom it is owed...’

69. In Breen v Williams, the Australian High Court considered a doctor/patient relationship one of ascendancy giving rise to fiduciary duties relating to some, but not all, aspects of the relationship.”

86.  However, as mentioned above, the fiduciary duty as pleaded is only restricted to the protection of the Partnership Asset which both Mr Justice A Chan and the Court of Appeal found to be non-existent.  The Partnership Asset of the Plaintiff and the 1^st Defendant, allegedly an interest in the Land in Dispute, simply does not exist.  The Plaintiff’s new case of a duty to protect a non-existent interest simply cannot get off the ground. 

87.  As Ribeiro PJ in Libertarian Investments Ltd v Hall (supra) at paragraph 73 said:

“ 73. Where a party is found to have undertaken an obligation to act in another person’s interest, it is necessary to determine what precisely the fiduciary duty owed consists of.  As pointed out by Mason J:

‘ ... it is now acknowledged generally that the scope of the fiduciary duty must be moulded according to the nature of the relationship and the facts of the case ... The often-repeated statement that the rule in Keech v Sandford ... applies to fiduciaries generally tends to obscure the variable nature of the duties which they owe. The rigorous standards appropriate to a trustee will not apply to a fiduciary who is permitted by contract to pursue his own interests in some respects.’ ”

88.  In the present case, the Plaintiff is not claiming that he has suffered any loss or damages as a result of the 1^st Defendant’s breach of fiduciary duties.  Rather, the Plaintiff’s case is that the Defendants should account to him for the profits they gained from the 2^nd Defendant’s purchase of the Land in Dispute from Gotland because such purchase was in breach of the 1^st Defendant’s fiduciary duties.  The only pleaded facts are as follow:

“ The 1^st Defendant’s opportunity of purchasing the Land from Gotland Enterprises Limited at the price of $11 million was available to him in the course of the Previous Proceedings in which he defended the Plaintiff’s interest in the Partnership Asset.”

89.  First, the 1^st Defendant was a party to the Previous Proceedings because he was the occupier of the Land in Dispute.  Indeed, he was first sued by Gotland.  He had to defend himself in any event.  Hence, it is not right to assert that the 1^st Defendant would not have taken advantage of the opportunity to purchase the Land in Dispute from Gotland but for his undertaking to defend the Plaintiff’s interest in the “partnership asset”.  There must be shown to be “some causal connection between the breach of trust and the loss to the trust estate for which compensation is recoverable, viz the fact that the loss would not have occurred but for the breach...” (Target Holdings Ltd v Redferns [1996] AC 421 at 434 per Lord Browne-Wilkinson).

90.  Indeed, it is not even pleaded that but for the 1^st Defendant acting for and on behalf of the Plaintiff’s interest in the Partnership Asset, the 1^st Defendant would not have had such an opportunity.  It is difficult to see how it could be said that the 1^st Defendant came across the opportunity to purchase the Land in Dispute as a result of his promise to defend the Plaintiff’s claim in the Partnership Asset. 

91.  Secondly, it must be noted that it is not disputed and Mr Wong, for the Plaintiff, agreed that any fiduciary relationship between the Plaintiff and the 1^st Defendant must have ended or terminated by reason of the Plaintiff’s joining in as a defendant in the Previous Proceedings on 6 July 2011.  The Plaintiff’s joinder application clearly suggests that he no longer considered the 1^st Defendant to be a suitable agent whose role was to defend the former’s interests.  Thereafter, the Plaintiff and the 1^st Defendant had adversarial claims over the Land in Dispute against each other.  The agency relationship, on any analysis, no longer subsisted. 

92.  A fiduciary “put[s] an end to his fiduciary obligations to the company so far as concerns any future activity by himself (provided that it does not involve the exploitation of confidential information or business opportunities available to him by virtue of his directorship)” (British Midland Tool Ltd v Midland International Tooling Ltd [2003] 2 BCLC 523 at paragraph 89 per Hart J). 

93.  In the present case, it is not even alleged that the identity of the vendor, namely, Gotland, is some sort of business secret or confidential information that only came to be known to the 1^st Defendant because he promised to defend the Plaintiff’s interest in the Partnership Asset on his behalf.  Indeed, the Plaintiff was in the same position as the 1^st Defendant in the sense that they were both defendants in the Previous Proceedings.  There is no dispute that both the Plaintiff and the 1^st Defendant could have approached Gotland to discuss any possible solutions to the Previous Proceedings.  The Plaintiff was not in any disadvantageous position vis-à-vis the 1^st Defendant. 

94.  I am of the view that from the point of time when the Plaintiff joined in the Previous Proceedings and made a counterclaim against the 1^st Defendant, it is unsustainable to allege that the 1^st Defendant continued to owe a fiduciary duty to the Plaintiff to protect his interest in the Partnership Asset.  From that point onwards, they knew that they had to take care of their own alleged interest in the Land in Dispute and they did so by engaging two separate teams of lawyers.  It was open to the Plaintiff, as much as it was open to the 1^st Defendant, to negotiate any form of compromise with Gotland.  The Plaintiff was, or might be, rather confident that he would win his case against Gotland and hence did not attempt to compromise.  The 1^st Defendant, with the benefit of hindsight, was more realistic about his case against Gotland and had achieved a compromise with Gotland.  In such circumstances, it would not be right that the Plaintiff, who had his full trial against Gotland and lost, can still hold the 1^st Defendant accountable for the fruits of his compromise with Gotland. 

95.  In Foster Bryant Surveying Ltd and another v Bryant and others [2007] Bus LR 1565, at 1571E, Rix LJ approved what Mr Livesey QC, as a deputy judge of the High Court, said in Hunter Kane Ltd v Watkins [2003] EWHC 186 (HC) at [25]:

“ 4. A fiduciary relationship does not continue after the termination of the relationship which gives rise to it. After the relationship is determined the director is in general not under the continuing obligations which are a feature of the fiduciary relationship.”

96.  Here, there is simply no plea and indeed nothing to suggest that somehow the fiduciary relationship between the Plaintiff and the 1^st Defendant continued after the Plaintiff joined in the Previous Proceedings and made counterclaim against the 1^st Defendant.

97.  Thirdly, Mr Wong for the Plaintiff relied on the case of Keech v Sandford (1726) Sel Cas Ch 61; 25 ER 223 for the proposition that a trustee is liable for breach of the duty not to profit even though the beneficiary was never in a position to have the benefit obtained by the fiduciary. 

98.  However, a former fiduciary is liable to account for the profits obtained from a business opportunity arising from his position as fiduciary only if the opportunity was a maturing one during the subsistence of the agency relationship (Canadian Aero Service Ltd v O’Mally (1973) 40 DLR 371 at p 382). 

99.  In other words, the business opportunity must be tangible at the time the fiduciary was in the position of trust and confidence.  The leading authority for this principle is Canadian Aero Service Ltd v O’Mally (1973) 40 DLR 371, where Laskin JA said at p 382:

“ An examination of the case law in this Court and in the Courts of other like jurisdictions on the fiduciary duties of directors and senior officers shows the pervasiveness of a strict ethic in this area of the law. In my opinion, this ethic disqualifies a director or a senior officer from usurping for himself or diverting to another person or company with whom or with which he is associated a maturing business opportunity which his company is actively pursuing; he is also precluded from so acting even after his resignation where the resignation may fairly be said to have been prompted or influenced by a wish to acquire for himself the opportunity sought by the company, or where it was his position with the company rather than a fresh initiative that led him to the opportunity which he later acquired.”

100.  In Kao Lee & Yip v Koo Hoi Yan & Others [2003] 1 HKLRD 296, Ma J (as he then was) said:

“ 70. A fiduciary’s liability for taking advantage of a business opportunity which he learnt about during the time he was still in the relevant fiduciary relationship is, however, not open-ended.  It must be tested against the other principle I have already referred to, namely, that upon the termination of the relevant fiduciary relationship, a fiduciary is fully entitled to make use of such skills, general knowledge, know-how, experience and client contacts as he has acquired.  This was the approach of the Court of Appeal in Kishimoto which I am bound to follow.  See also the similar approach adopted by Hutchison J in Island Export Finance Ltd. v Umunna [1986] BCLC 460, at 478a-482e.

71. Thus, the courts have developed the test of the so called “maturing business opportunity”.  In other words, was the business one that was, for example, actively being pursued by the beneficiary in the first place and what stage had this business opportunity reached? Canadian Aero Service Ltd. is usually cited as the authority for the statement of principle involved.  At 382, Laskin J says this:

‘ An examination of the case law in this Court and in the Courts of other like jurisdictions on the fiduciary duties of directors and senior officers shows the pervasiveness of a strict ethic in this area of the law. In my opinion, this ethic disqualifies a director or senior officer from usurping for himself or diverting to another person or company with whom or with which he is associated a maturing business opportunity which his company is actively pursuing; he is also precluded from so acting even after his resignation where the resignation may fairly be said to have been prompted or influenced by a wish to acquire for himself the opportunity sought by the company, or where it was his position with the company rather than a fresh initiative that led him to the opportunity which he later acquired.”

72. I should pause here just to clarify that the “maturing business opportunity” concept does not narrow the Not To Profit Duty.  It is but a facet of it.  As stated above, the duty applies irrespective of whether the beneficiary could have obtained the benefit anyway of the profit that the fiduciary made, this being the rule in Keech v Sandford.  The “maturing business opportunity” concept may upon analysis perhaps ultimately be just one of causation, being the link between the profits made to the breach of duty.  Although this does not arise in the present case, it should nevertheless not be assumed that there can never be liability unless the business opportunity was one in which the beneficiary was ‘actively pursuing’.

73. Mr. McCoy relies on the approach of the Court of Appeal in Kishimoto to suggest that in the present case, there was no question of any “maturing business opportunity” that the Plaintiff had been deprived of and in any event, none had been pleaded.  There, a claim was made against a former senior manager by his employers on the ground that he had breached his fiduciary duties by diverting to a company (in which he had a substantial interest) a lucrative supply contract that the plaintiffs claimed was a maturing business opportunity.  The Court of Appeal reversed the judge’s conclusion that damages should be awarded for this breach of fiduciary duty.  It did so on the basis that there was no maturing business opportunity at all.  The relevant supply contract which the plaintiffs claimed should be taken into account was at the time the manager was employed by the plaintiffs “an embryonic business project”: see 2661.  Stress was laid on the fact that the relevant supply contract did not appear on the horizon for nearly a year after the manager had left the company and that the whole project was one that called for a fresh initiative on the defendant’s part by the use of his own skill and initiative: see 267A, 278H.

74. In other words, the business opportunity must be tangible (or mature) at the time the fiduciary was in the position of trust and confidence.  If at this time the business opportunity was nebulous and uncertain, it would be unfair to deprive the fiduciary of the benefit of the matured opportunity once this occurred.  Here, there would scarcely be a link or resemblance between the business opportunity that actually enured to the fiduciary’s benefit and the business opportunity of which he gained knowledge at the time of his being in a fiduciary relationship with the beneficiary.  This can be put another way.  Where the opportunity is so remote that the eventual obtaining of it by the fiduciary cannot realistically be said to be linked to any position of trust and confidence that the fiduciary was in regarding that opportunity, there is no breach.  Thus, for example, where as in Canadian Aero Service Ltd., officers of a company are negotiating on behalf of their employers a contract that is very much at a developed stage and then the officers take advantage of that contract for themselves once they leave their employment, liability is established.  This is to be contrasted with, say, the facts in Kishimoto, where the business opportunity was at an “embryonic” stage.

75. Whether or not a business opportunity is sufficiently mature will be often a question of degree for the Court to decide.  Relevant factors will include, for example, whether the business opportunity that eventually accrued to the fiduciary was one that resulted from a prolonged fresh initiative on his part (see Kishimoto at 278H; Island Export Finance Ltd. at 481f) or the stage reached in any discussions regarding the business.  Timing may also feature as a factor.  For example, where the relevant business opportunity was obtained a long time after the fiduciary had resigned or left the relevant fiduciary relationship, this may be relevant to show that the business opportunity was not sufficiently mature.  In Kishimoto, as noted above, the contract did not appear on the horizon until a year after the senior manager left his employment.  Linked to this factor would be the reasons for the fiduciary leaving his position as well.  All these matters are for the judge trying the case to factor into the scales.

76. Ultimately, whether one is dealing with maturing business opportunities is really a matter of labelling.  It provides but one example of the Not To Profit Duty.  The basic inquiry is always whether the fiduciary’s interests have conflicted with a “specific” interest of the beneficiary.  This I derive from the judgment of Falconer J in Balston at 412, referred to in Framlington Group plc v Anderson [1995] 1 BCLC 475, at 495-6.  The specific interest may be a maturing business opportunity or some other interest.  The matter was put in the following way by Falconer J in Balston at 412:

‘ In the statement of the overriding principle by Roskill J. in the I.D.C. case, namely “that a man must not be allowed to put himself in a position in which his fiduciary duty and his interests conflict,” the conflict contemplated must be one with a specific interest of the company (or other body or person) to whom the fiduciary duty is owed, as, for example, a maturing business opportunity, as in Canaero, or the plaintiff’s interest in the contract secured by the defendant in the I.D.C. case, or a contract falling within the first class of contracts in Lord Blanesburgh’s dichotomy in Bell v. Lever (page 194), or the use of some property or confidential information of the company which has come to a director as such (Lord Blanesburgh’s qualification of his second class). In my judgment an intention by a director of a company to set up business in competition with the company after his directorship has ceased is not to be regarded as a conflicting interest within the context of the principle, having regard to the rules of public policy as to restraint of trade, nor is the taking of any preliminary steps to investigate or forward that intention so long as there is no actual competitive activity, such as, for instance, competitive tendering or actual trading, while he remains a director.’ ”

101.  In Kishimoto Sangyo Co Ltd and another v Akihiro Oba and others [1996] 2 HKC 260, Litton VP (as he then was) at 278I – 279A said:

“ Can the mere prospect of future business come within the concept of a ‘maturing business opportunity’, as formulated in Canaero? In my judgment the answer must be no.”

102.  There is no plea or indeed even any suggestion that there was a maturing business opportunity available to the 1^st Defendant prior to the Plaintiff’s join in as a defendant in the Previous Proceedings on 6 July 2011. Gotland commenced the Previous Proceedings on 21 November 2003.  The 2^nd Defendant only acquired the Land in Dispute from Gotland on 28 August 2014.  In these circumstances, I am not convinced that the opportunity to purchase the Land was a maturing business opportunity before the fiduciary relationship ceased.  The Plaintiff’s claim for breach of fiduciary duty is thus unsustainable. 

103.  During the course of submissions, Mr Wong for the Plaintiff submitted that the 1^st Defendant was nonetheless in breach of fiduciary duty due to the following factors:

  (1) the 1^st Defendant was in a uniquely advantageous position of being and remaining throughout a defendant in possession;

  (2) in litigation, the likelihood of settlement with the opposing side increases as the litigation progresses; and

  (3) the financial pressure arising from litigation was particularly great in Gotland’s case. 

104.  First, these are not part of the Plaintiff’s pleaded case at all.  Secondly, I cannot see how these factors could lead one to conclude that the 1^st Defendant was in breach of fiduciary duty, despite the fact that the maturing business opportunity test is not met on the facts. 

105.  The first factor is mere speculation.  And if so, it is precisely because the 1^st Defendant was sued as the occupier of the Land in Dispute in his own right.  As for the second and the third factors, the Plaintiff was in the same position as the 1^st Defendant to take advantage of these factors if he chooses to, but he chose not to. 

106.  The Plaintiff also relied on a document on costs sharing which was in the Previous Proceedings.  Mr Li SC submitted that this document is not a new document but rather, it was disclosed very early on in the Previous Proceedings. I agree that it is not clear to me how this costs sharing agreement helps the Plaintiff’s constructive trust claim.  I am reminded that it was the Plaintiff’s case in the Previous Proceedings that he owned all interests in the Land in Dispute and he even had a plan on how to distribute such interests to his children, including the 1^st Defendant, upon his demise.  That was why, according to the Plaintiff, his children contributed to the costs of the Previous Proceedings

107.  I agree with Mr Li SC that the Plaintiff’s case on the costs sharing document is inconsistent with his current case that he and the 1^st Defendant were equal partners over the Land in Dispute and that the Defendants now holds the legal title of the Land in Dispute on constructive trust for him.

108.  Finally, the Plaintiff has never made any application to amend his pleadings both before Master S Kwang and in this court before or during the hearing.  As mentioned above, I specifically asked Mr Wong whether he considered the current pleadings as sufficient for the Plaintiff’s case and he answered in the affirmative. 

109.  During the hearing, there were no proposed amendments before this court so as to consider its viability.  In Total Lubricants Hong Kong Limited & Others v Christophe de la Cropte de Chanterac & Others HCA 1694/2008, unreported, 15 December 2009, Poon J (as he then was) said:

“ 14. First, if a pleading is capable of being cured by amendments, it should not be struck out. An opportunity to amend should be given instead. However, if the pleading is so defective that no amendment can cure it or if the proposed amendment is incapable of improving the defects, the pleading is liable to be struck out and the proposed amendment should be refused.

15. Second, when a party seeking to amend his pleadings in order to save it from being struck out, the proposed amendment should be properly and exactly formulated, includes all necessary averments or mandatory particulars and constitutes a full and complete plea of a reasonable cause of action.”

BELATED APPLICATION TO AMEND STATEMENT OF CLAIM

110.  Well after the hearing and the parties’ filing of supplemental written submissions, the Plaintiff served on the Defendants a summons on 25 August 2017 seeking leave to file and serve an Amended Statement of Claim during the court vacation (“Amendment Summons”).  I have no difficulties in dismissing the Amendment Summons.

111.  First, the Plaintiff has had ample opportunities and time to put in whatever amendments he deems fit for the court’s consideration, whether at the stage of the hearing before Master S Kwang or at any stage before the conclusion of the hearing of this appeal.  It will not be right for this court to allow the Plaintiff to re-open arguments on the merits of the appeal well after the conclusion of the hearing.

112.  Pickering Acting CJ in Sheung Kwok Leung v R [1976] HKLR 742 at 755 said:

“There are no grounds for the assumption that this Court will permit further argument either orally or in writing after the conclusion of the hearing of the appeal. Were this to be allowed as a practice the task of the Clerk of Court in organizing the court’s calendars would be rendered unmanageable and that of the judges in hearing and deciding the appeals coming before the court, impossible. There may be cases in which something both cogent and urgent comes to counsel’s attention after the conclusion of the hearing of the appeal and in such circumstances – and they much be very rare – with the consent of the other side and, we emphasise, the approval of this Court, it may be permissible to allow a second bite at the cherry.”

113.  Secondly, for the reasons set out above, this court is of the view that the proposed amendments, even if allowed, cannot salvage the defects of the Plaintiff’s constructive trust claim.  This court has, out of abundance of caution, perused the proposed amendments and came to the view that it is futile to allow the amendments.  In LY Group Development Ltd. V. East Canton Ltd [2015] 4 HKLRD 84, To J at §13 said:

“If the proposed amended Statement of Claim cannot survive the striking out application, it would be futile to allow the application. The court should dismiss the application to amend and consider the striking out application on the pleadings as it stands.”

DISPOSTION

114.  For all the reasons stated above, I dismiss this appeal with a cost order nisi that costs (including costs occasioned by and incidental to the Amendment Summons) are to be paid by the Plaintiff to the Defendants, on a full indemnity basis, with certificate for one counsel, to be taxed if not agreed.  This cost order nisi should be made absolute within 14 days from the date of this decision unless the parties apply to vary the same within the 14-day period.

115.  Finally, it remains for me to thank Mr Wong for the Plaintiff and Mr Li SC (together with him Mr Chak Yin Wong) for the Defendants for their helpful assistance rendered to the court. 

Mr Chau Yuen Li SC, leading Mr Chak Yin Wong, instructed by Tony Kan & Co, for the 1^st & 2^nd Defendants