ASIA-PAC INFRASTRUCTURE DEVELOPMENT LTD AND OTHERS v. SHEARMAN & STERLING (a firm) AND OTHERS

HCA 806/2006

[2021] HKCFI 3381

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

ACTION NO 806 OF 2006

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DECISION

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1.  On 18 May 2021, the judgment for the trial of preliminary issue was handed down by this court (“Judgment”). The preliminary issue (“PI”) concerned whether the Deeds of Assignment relied upon by the 1^st Plaintiff (“P1”) as assignee of the causes of action of the other Plaintiffs in this Action were champertous and therefore invalid.

2.  The PI was resolved in favour of the Defendants.  Pursuant to the Judgment entered on 18 May 2021, the Deeds of Assignment were declared to be champertous and void, and the Plaintiffs’ claims against the Defendants were dismissing save for P1’s claim for funds which it had allegedly advanced to Greater Beijing First Expressways Ltd (“GBFE”) via the 4^th Plaintiff (“P4”). 

3.  On the same day that the Judgment was handed down, the Plaintiffs took out a Summons applying for the Re-Amended Statement of Claim (“RASOC”) to be further amended.  The proposed amendments can be classified as (a) resurrecting the claims of the 2^nd to 4^th Plaintiffs which were allegedly assigned to P1 (“Reinstatement”); (b) adding the averment that the loans of P1 to P3 advanced “through P4”, which were pleaded in para 27 of the RASOC, were for the purpose of repayment of debt by P4 to GBFE; and (c) tidying-up the RASOC.

4.  The Reinstatement is hotly disputed by the Defendants as a blatant abuse of process in the wider Henderson v Henderson sense. They also argued that the discretion of the court should not be exercised to permit what should properly be regarded as post-judgment amendments.  In my view, the Defendants are right and this amendment application can be dealt with swiftly.

5.  The claims of P2 to P4 were deleted from this Action in the RASOC filed on 30 May 2012.  By a decision dated 31 May 2019 (“Decision”), the court acceded to an application by the 1^st to 8^th Defendants (“Shearman Defendants”) to order the trial of the PI.  In their summons for the application, it was made plain that if the contention that the Assignments were invalid was upheld, the Action against the Shearman Defendants should be dismissed with the exception of P1’s personal claim. 

6.  In the course of the arguments on the PI application, counsel for the Plaintiffs submitted that the Plaintiffs intended to amend their pleading by reinstating the claims of P2 to P4 as an alternative in the event that the Deeds of Assignment were held to be invalid (Decision, §18). 

7.  Despite the concern of the court whether the intended application should be heard before the determination of the PI application, after considering the submissions of the parties, the court decided to determine the application on the existing material (Decision, §§19 and 20).  It should be mentioned that the Plaintiffs were forewarned by the Shearman Defendants that the intended application would be hotly contested on the ground of, inter alia, abuse of process (Decision, §21). 

8.  The court went on to grant the PI application but noting that in the event of a successful amendment application the court might have to revisit whether the trial of PI should continue (Decision, §22).

9.  In the event, no amendment application was made prior to or at the trial of PI.  The effect of allowing the Reinstatement would undermine the Judgment which was legitimately obtained by the Defendants after the trial of PI, and render the trial a complete waste of time and costs of the parties, as well as the resources of the court.

10.  The abuse of process is self-evident.  However, it goes further.  It was held in the Judgment (expressing agreement with the view taken by DCHJ Mayo and DHCJ Wilson Chan) that the alleged Assignments were made to evade the payment of security for costs (Judgment, §102).

11.  What the Plaintiffs had done was to engineer the Assignments for an ulterior motive.  They persisted in that false case knowing that an amendment application might avoid an expensive trial.  They failed to make the amendment application and lost on the trial.  They now want to wipe the slate clean. 

12.  The abuse of process must be judged in the context of a case brought in 2006 concerning events which took place between 1999 and 2000.  Despite the advice of this court back in 2017 that this Action should proceed without further delay, little progress was made.  The delay and the potential injustice to the Defendants were taken into consideration by the court in ordering the trial of PI (Decision, §§15 and 16).

13.  The Henderson principle is trite.  There is overlap between such principle and the discretionary consideration of the court which this amendment application invokes.  The Plaintiffs could and should have made the amendment application before the trial.  If allowed, it would be unlikely for the trial to proceed and much resources would have been saved.  The Plaintiffs cannot be allowed to blow hot and cold.  No litigant is allowed to advance part of its case whilst keeping another part up its sleeve, and when it lost on the former then try the latter.

14.  I do not believe that any of the authorities cited on behalf of the Plaintiffs can be said to permit what they are seeking to do.  The proposition that once the Assignments were held to be invalid, the causes of action in question restored to P2 to P4 (Massai Aviation Services v AG [2007] UKPC 12) is no answer to the abusive conduct of the Plaintiffs. 

15.  For these reasons, the Reinstatement is disallowed.  The proposed amendments to paras 40A, 40B and the Prayer of the RASOC are disallowed. 

16.  The tidying-up amendments are not in dispute.  I allow the proposed amendments to paras 30, 30A, 30B, 34 and 38 of the RASOC. 

17.  Notwithstanding the opposition of the Defendants, I also allow the amendments to paras 26E and 27.  The amendments are relevant to the existing claim of P1.  They merely assert the purpose of the loan(s) advanced by it, and the assertion is apparently supported by documentary evidence.

18.  I disallow the proposed amendments to paras 39A and 40 of the RASOC.  They seek to expand and elaborate on the alleged loss of P4.  It is common ground that a refusal to allow the Reinstatement would result in rejection of these amendments also. 

19.  Further, I fail to see a proper basis in the pleading for P4’s claim to recover the repayment of USD14 million which it owned to GBFE.  Apart from deficiency in the pleading, I accept the submission of the 9^th Defendant that repayment of loan is not a recoverable loss. 

20.  I shall here the parties on the costs of the amendment application.