LEE YING WAH v. YUEN TO, TONY AND ANOTHER

HCA976/2001

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

ACTION NO. 976 OF 2001

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R U L I N G (2)

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1. In the course of today's appeal, Mr Wong made a submission on the basis of a challenge to the validity of the two assignments by which the Plaintiff acquired the right from Nan Hai Wah Hong who supplied goods to the Defendants. Mr Wong said that the same submission has been made before the Master and this was reflected in paragraph 4 of his supplemental skeleton submissions. The point is basically that because of the blending of the various transactions by Wah Hong into a single account, the debts due from the Defendants to Wah Hong became a single debt.

2. That was the application of the Clayton's rule and, in support of that, the Defendants cited the case of Bodenham, Philips v Purchas the Elder which was also an authority cited to the Master. But the point taken by the Defendants in fact goes further. The Defendants say that because of the transformation of all these into a single debt, it was not possible as a matter of law for Wah Hong to assign its rights in respect of the separate transactions to the Plaintiff under the two assignments.

3. Of course, this is purely a point of law and Mr Wong said that this logically followed from the legal proposition that all these transactions, having been blended into a single account, became one single debt. Having looked at the supplemental skeleton submissions of the Defendants, in particular, paragraph 4 thereof, I accept that this point had been raised before the Master. Paragraph 4 said this:

"This gives rise to a legal question on whether the Chinese company, that is Wah Hong, could in February 2001 assign its rights to claim the sums under purchase orders and delivery notes to the Plaintiff."

4. Unfortunately, this was not how the point was perceived by the learned Master because the learned Master seemed to consider the matter on the basis of the Clayton's rule only. That may be understandable because of what happened at the previous hearing which took place on 20 November 2001. What happened on that day was that the Master has to deal with the application for leave to amend by the Plaintiff. One of the proposed amendments was to join Wah Hong as a co-Plaintiff in anticipation of the Defendants' challenge to the validity to the assignment as set forth in the Defence filed on 19 April 2001.

5. There seems to be some misunderstanding as to the position of the Defendants at that hearing. The Master's understanding, and perhaps also the understanding of counsel for the Plaintiff, was that the Defendants did not seed to challenge the validity of the assignments. (See paragraph 3 of the reasons for decision given by the Master on 12 December 2001.)

6. However, Mr Wong said his concession, as reflected in his skeleton submission placed before the Master on 20 November and also reflected in the relevant paragraph in the affirmation of Miss Wong was only to the following extent: that according to the Plaintiff's case, the debts were assigned to the Plaintiff by Wah Hong. He said that was not a concession that the Defendants accepted the legal validity of the assignments.

7. Mr Wong said that he had told the Master at the hearing that he did not challenge the execution of the assignments and the authenticity of the same. But he maintained that he did not say to the Master that he did not challenge the validity of the assignments.

8. What happened was that as a result of what was said by Mr Wong, the Plaintiff decided not to proceed with the application for joinder on 20 November and the Master only had to deal with the other amendments to the Statement of Claim. I bear in mind that today's hearing before me is in fact by way of re-hearing so I am not bound by what happened before the Master. The point now sought to be raised by Mr Wong on behalf of the Defendants was in fact a point that had been set out in paragraph 4 of his supplemental submission placed before the Master on 6 December 2001.

9. The upshot of all these is that, as I see it, there was a genuine misunderstanding between the parties and also in the mind of the Master as to the extent of the concession by the Defendants on 20 November 2001. I am not in a position to decide who should be blamed for such misunderstanding. This being a re-hearing, I do not think it is right for me to bar Mr Wong from taking this point which is basically a pure point of law. On the other hand, I do not think it is right or fair to the Plaintiff, bearing in mind the history of the matter, to allow this point to be taken at this stage without giving the Plaintiff an opportunity to renew the application for joinder.

10. Mr Wong submitted that it is too late now to allow the Plaintiff to do so because that application has been withdrawn by Plaintiff's counsel. However, it is clear to me that not only was that a result of Plaintiff's counsel misunderstanding as to Mr Wong's concession, but also the misunderstanding of the Master.

11. In these circumstances, I think it is fair to allow the Plaintiff to renew its application for joinder and I will give leave to the Plaintiff to do so. I will hear parties as to directions for that purpose. Of course, I am aware that in taking this course, the appeal will have to be adjourned.