CHINA EVERBRIGHT-IHD PACIFIC LTD. v. CH'NG POH AND OTHERS and LOW CHANG HIAN AND OTHERS (Third Parties)

CACV49/99

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF APPEAL

CIVIL APPEAL NO. 49 OF 1999

(ON APPEAL FROM HCA NO. 12837 OF 1995)

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J U D G M E N T

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Chan, CJHC :

1. This is an appeal from the decision of Yuen J who, upon the application of the 5th third party, struck out the 1st defendant's Third Party Statement of Claim on the ground that it does not disclose any reasonable cause of action.

The proceedings

2. The plaintiff commenced the main action in December 1995 against the 1st defendant for damages for conspiracy, conversion and breach of fiduciary duty and for other relief. At one stage, 12 other defendants were joined but 10 of them had since been dropped leaving the 1st, 11th and 12th defendants now remaining in the main action. The pleadings between the plaintiff and the 1st defendant were respectively amended several times. It was in October 1997, almost 2 years after the commencement of the main action, that the 1st defendant issued third party proceedings against the 5th third party and 4 others. The Third Party Statement of Claim was filed on 1 April 1998 and a defence was filed on 15 May 1998.

Applications before the judge

3. On 14 October 1998, the 5th third party applied to strike out the Third Party Statement of Claim against him on the ground that it failed to disclose any reasonable cause of action. Before the hearing, the 1st defendant issued a summons to amend his Third Party Statement of Claim and the 5th third party applied to amend his striking out application by adding an additional ground, i.e. that the Third Party Statement of Claim should be struck out as an abuse of process of the court. Both the original Third Party Statement of Claim and the proposed amendments were placed before the judge. Two causes of action, namely, indemnity and contribution were pleaded. The judge held that the pleadings did not disclose any reasonable cause of action in either of these causes of action. The 1st defendant appeals against this decision.

Grounds of appeal

4. In the first 3 grounds set out in the Notice of Appeal, the 1st defendant complains that the judge was wrong to hold that there was no reasonable cause of action in indemnity or contribution. In his 4th and 5th grounds, the 1st defendant seeks to argue that he has two further causes of action, namely, unjust enrichment and inconsistent dealing with a property which is subject to a trust and he proposes to apply for leave to amend the Third Party Statement of Claim accordingly. For the purpose of this appeal, we shall consider all the proposed amendments to the Third Party Statement of Claim.

The plaintiff's claim

5. In order to understand the 1st defendant's pleaded case against the 5th third party, it is necessary to examine the plaintiff's case against the 1st defendant and his defence thereto. It is in the light of such background that one should consider the Third Party Statement of Claim.

6. The plaintiff was, prior to 17 August 1985, controlled by Territorial Development Limited ("Territorial") which was in turn beneficially owned by one Mr C H Low who is the 1st third party. According to the plaintiff's Re-Re-Amended Statement of Claim, pursuant to the negotiations between the 1st defendant and Mr Low, there was an agreement made on 18 July 1985 whereby Territorial agreed to sell 77 million shares in the plaintiff for $232.54 million to a company called Join Park Limited (Join Park) which was controlled by the 1st defendant and the 5th third party for the purpose of the purchase. The purchase was to be completed on 17 August 1985. During their negotiations, the 1st defendant and Mr Low had agreed that three debts amounting to $127 million which were owed to the plaintiff by three different companies would be repaid to the plaintiff prior to the completion of the purchase. The plaintiff alleges that the 1st defendant was unable to raise finance for the entire consideration and that the 1st defendant had conspired with Mr Low and 3 other persons, namely, Quek Teck Huat, Doreen Yong Poh Choo and Victor Tan Khai Chong to injure the plaintiff and to convert the $127 million debts which were payable to the plaintiff to their own use. It is alleged that the conspiracy was implemented by a series of circular transfers of funds in the form of cashier orders and cheques. First, Mr Low through his beneficially owned subsidiary, Wanfong Nominees Limited (Wanfong), obtained $127 million from the Ka Wah Bank by procuring the issue by that bank of three cashier orders in that sum. These cashier orders were issued in favour of the plaintiff and paid into its account with the Ka Wah Bank. Then Mr Low and the others procured the issue of eight cheques by the plaintiff in the same amount which were then paid into the account with the Ka Wah Bank of Dixon Limited which is the plaintiff's subsidiary. The money was then further transferred to Wanfong. The plaintiff alleges that the 1st defendant was part of the conspiracy, had acted in breach of his fiduciary duty as a director, chairman and deputy chairman of the plaintiff and was liable as a constructive trustee of the money defrauded from the plaintiff and also for the conversion of that money.

7. It is important to note that the plaintiff does not allege that the 5th third party was involved in the conspiracy and makes no claim against him. The plaintiff's claim against Join Park (which was originally the 13th defendant) was also dropped.

The 1st defendant's defence

8. In his defence to the plaintiff's claim, it is accepted that the 1st defendant and the 5th third party had agreed with Mr Low that 77 million shares in the plaintiff which were owned by Territorial would be transferred to Join Park for a consideration of $232.54 million. The defendant alleges that he, with the full knowledge and consent of the 5th third party, had agreed with Mr Low (acting for Territorial) and Quek that Territorial would procure the repayment by three companies of their debts due to the plaintiff and that if Territorial should fail to do so, it would reduce the purchase price of the shares accordingly. It is alleged that Mr Low and the others, Wanfong and the Ka Wah Bank had acted to deceive him, the 5th third party and their joint enterprise Join Park by going through a series of circular transfers of funds. It is alleged that the 77 million shares were pledged to the Ka Wah Bank as security for a loan by the bank to the 1st defendant and the 5th third party of $127 million out of which a sum of $109 million would be made available as part payment to Territorial of the purchase price. These 77 million shares were on completion registered in the name of various nominee companies. It is alleged that 26% of the shares, namely $5.8 million, $3.3 million and $10.92 million were transferred to and registered in the name of Global Grace, Gransail and Join Park respectively which were held for the benefit of the 5th third party and/or disposed of by him for his sole benefit. The 1st defendant also alleges that in May 1987, 58.28 million shares were re-possessed by Ka Wah Bank in full and final settlement of the loan of $127 million. The 1st defendant specifically denies that the shares are traceable. He also relies on the statute of limitation, laches and acquiescence.

Indemnity

9. In the first two grounds of appeal, the 1st defendant complains that the judge had failed adequately or at all to consider the 1st defendant's cause of action in indemnity as pleaded in the proposed amended Third Party Statement of Claim. The 1st defendant's pleaded case is this. He and the 5th third party owned 74% and 26% respectively of the shares in Join Park which was acquired for the purpose of purchasing 77 million shares in the plaintiff at the price of $232.54 million. They intended that their respective beneficial interests in the shares in the plaintiff and their respective contributions towards the purchase price would be in the same proportion as their shareholdings in Join Park. The 1st defendant alleges that "thereby", they had impliedly agreed that if one of them had paid more than his portion of the contribution towards the purchase price, the other would indemnify him in the amount of the excess.

10. Counsel submits that the 1st defendant and the 5th third party understood and intended that they would pay the purchase price of the 77 million shares in the proportion of 74% and 26% respectively. If therefore the $127 million was indeed used to pay the balance of the purchase price, part of that sum less certain deductions went to satisfy the 5th third party's commitment to pay for his 26% share. The 5th third party had received those shares which were acquired by him or for his benefit without having to pay for them. He should be liable to indemnify the 1st defendant in respect of a sum of $19,460,400.00.

11. In her judgment, the learned judge dealt with the various situations where a right of indemnity might arise in law and whether such a right could arise in the present case. Counsel submits that the judge seemed to have held that a right of indemnity arises only from an express contract, from statute or by implication from some principles of law and that if she did, she was wrong in law in that there are other situations where the right of indemnity can arise.

12. With respect, I do not agree that the learned judge was wrong in the law on this issue. Counsel does not dispute that the law is correctly summarised in Halsbury's Laws of England, 5th ed., Vol. 20, paragraphs 347 and 348: a right to indemnity may arise from contract, express or implied, from an obligation resulting from the relation of the parties, or by statue; this would depend on the terms of the contract, or statute in question, or the nature of the relationship; a right to indemnity based on an implied contract or an obligation imposed by law may arise in various ways, such as where money is paid at the request of another or where, for example, there is a relationship between the parties such as that of principal and agent or employer and employee. In the present case, the learned judge first excluded the possibility of a right of indemnity arising from an express contract or from statute which was not relied upon by the 1st defendant. She then dealt with the possibility of a right of indemnity arising by implication from some principles of law. She took the view that it was necessary to plead clearly the facts from which the court is being asked to make such an implication and for the opposite party to know what case he has to meet. The judge held that the 1st defendant had failed to sufficiently plead the necessary facts. She also ruled out the possibility of a right of indemnity arising out of a particular legal relationship between the parties since this was neither pleaded nor relied upon by the 1st defendant. The judge finally held that it had not been shown that there was an implied agreement or obligation of law that the 5th third party should indemnify the 1st defendant. In my view, the learned judge had sufficiently dealt with the various situations in which a right of indemnity can arise and which are likely to be applicable in the present case. I do not think she was in error on the law.

13. Counsel further submits that the judge was wrong in that she failed to hold that there is a cause of action on implied agreement to indemnify the 1st defendant. It would seem that the 1st defendant is alleging that an agreement could be implied from his and the 5th third party's intention in connection with their joint venture in the purchase of the 77 million shares.

14. An implied agreement usually arises in cases where from the facts of the case, particularly the conduct of the parties, the law implies a promise on the part of Party A towards Party B for what Party B has done to or on behalf of Party A. It is necessary, in order to rely on an implied agreement, to state clearly the facts which are said to give rise to such an implied agreement.

15. In the present case, the main facts on which the 1st defendant relies and which are pleaded in the proposed amended Third Party Statement of Claim are (1) the 1st defendant and the 5th third party acquired Join Park for the purpose of purchasing 77 million shares in the plaintiff, (2) their respective shareholdings in Join Park were 74% and 26% and (3) it was their intention that their respective beneficial interests in the shares and their respective contributions to the purchase price would be in the same proportion as such shareholdings in Join Park. In my view, these facts are far from sufficient to give rise in law to an implied promise on the part of the 5th third party to indemnify the 1st defendant for any payment which the latter might have made towards the purchase of the shares in the plaintiff. It has not been pleaded that they have agreed on how the purchase price was to be paid for and how they would contribute towards the purchase price. All that is pleaded is that the 1st defendant and the 5th third party had intended that their respective beneficial interests in the shares and their respective contributions to the purchase price would be in the same proportion as their shareholdings in Join Park. It is not pleaded that such intention was shared by the 5th third party or that the 5th third party had acted in anyway so as to give the 1st defendant the impression that the 5th third party had shared such intention. It is also not pleaded how such intention, even if it was shared, was manifested in any way. If I understand counsel correctly, it is not the 1st defendant's case that there was an agreement between the parties (as opposed to a mere intention) that their respective beneficial interests in the shares and their respective contributions to the purchase price would be in the same proportion as their shareholdings in Join Park. If there had been such an agreement, this might be a fact which is relevant to the implication of an agreement to indemnify the 1st defendant. But what is relied on is simply the intention of the two parties which somehow gives rise to an implied agreement to indemnify. There is also no suggestion that there was any conduct on the part of the 5th third party from which the law would imply that he had promised to indemnify the 1st defendant.

16. In my view, the basis of the alleged intention is already far from clear and it is quite impossible to imply an agreement to indemnify from such allegation. The 1st defendant has not pleaded sufficient facts which can give rise to an implied agreement to indemnify. The learned judge had arrived at the right conclusion.

17. The example given by counsel for the 1st defendant is, with respect, not analogous. If A and B agree to buy a certain quality of goods at a particular price and to share equally both the goods and the purchase price and if during the absence of A, B pays the full price, B is entitled to be reimbursed by A. However, this is not an example of an implied agreement to indemnify. In counsel's example, the parties have agreed to share both the goods and the price. Under these circumstances, there is an implied request by the absent party to the other party to pay first and be reimbursed later. This is not the case here.

18. For these reasons, I agree with the learned judge that there is no reasonable cause of action on indemnity.

Contribution or recoupment in equity

19. The second cause of action is allegedly based on contribution or recoupment in equity. Counsel submits that if there is no common liability in the 5th third party to be sued by the plaintiff and no implied agreement to indemnify the 1st defendant, there is a community of interest in the 77 million shares between the 1st defendant and the 5th third party. Hence, it is argued, the 5th third party also has the burden of an obligation to pay for those shares and the 1st defendant is entitled to seek contribution from him. Counsel relies on the principle as stated by Vaughan Williams LJ. in Bonner v. Tottenham and Edmonton Permanent Investment Building Society [1899] 1 QB 161. In that case the learned Lord Justice said:

"There is a common law principle of liability, and also a principle of liability in equity, and these two principles differ. The common law principle requires a common liability to be sued for that which the plaintiff had to pay, and an interest of the defendant in the payment in the sense that he gets the benefit of the payment, either entirely, as the case of the assignee of a lease or pro tanto, as in the case of a surety who has paid, and has his action for contribution against his co-surety. The principle in equity seems wide enough to include cases in which there is community of interest in the subject-matter to which the burden is attached, which has been enforced against the plaintiff alone, coupled with benefit to the defendant, even though there is no common liability to be sued. In such a case it seems to me a plaintiff may recover in equity, although there is no common liability to be sued." (at page 174)

"The equitable principle seems to me based upon natural justice requiring that equity should neutralise 'inter se' the accident that the burden has been borne by one for the benefit of others associated with him in interest, whether such incidence of burden is the result of election of a plaintiff who might have sued all those interested, or whether it is the result of the requirements of the law as to the parties to actions, or whether it is the result of what may be more properly called 'accident' like the 'jettison' of a part of a cargo severally owned, or the seizure of wines on behalf of the Crown in right of prisage. In each of these cases the application of the equitable principle depends on community of interest in something in respect of which one has borne a burden for the benefit of another or others." (at p. 176)

20. It can be noted that the other two Lord Justices in that case did not say whether they would subscribe to this statement of principle. They were content to dispose of the case before them on the common law principle based on common liability. That was also the main basis for Vaughan Williams LJ.'s decision. Hence this equitable principle of contribution and recoupment in equity as suggested by him was clearly obiter dictum. It is also to be noted that the three cases cited by the learned Lord Justice to "illustrate" the two principles at common law and in equity did not seem to clearly and directly bear out this equitable principle. The learned authors of Goff & Jones, the Law of Restitution, 5th Edition, commented on such principle at p.391 - 392:

"This principle is very similar to that underlying general average claims. But there appears to be no single case, general average apart, where it has been applied to allow a claim for contribution or recoupment which would otherwise have failed. Indeed, in Bonner's case itself, the Court of Appeal held that a lessee, who had paid the head rent, could not claim recoupment in equity from an underlessee of an assignee; there was no 'community of interest' between them since the covenant in accordance with which a lessee pays rent or expends money in repairs is a covenant in a lease in which the underlessee has no interest.

However, a principle similar to that of 'community of interest' underlies contribution claims between landowners, where there is a common encumbrance over different parcels of land."

21. It would seem that this equitable principle based on community of interest has not been clearly applied in any case apart from general average claims or certain contribution claims between landowners. The first type of claims are maritime cases in which principles based on customs apply and the latter type of cases can be explained on other principles.

22. The learned judge refused to apply that principle to the present case on the ground that there was no community of interest. Counsel for the 1st defendant submits that the judge was wrong in coming to that conclusion because the 1st defendant and the 5th third party had a community of interest in the 77 million shares. With respect, I do not agree. Even if the equitable principle as stated by Vaughan Williams LJ in the Bonner case has any application to the type of cases similar to the present, I do not think it can be applied in this case. If I understand it correctly, this principle would seem to apply to the situation where a party has paid or is obliged to pay another in order to protect the interest which is shared by him with the person against whom he seeks a contribution or recoupment. The subject matter of the community of interest must be something which he seeks to protect by making payment to another person. This is not the case here.

23. The 1st defendant and the 5th third party, as owners of Join Park, were obviously interested in the shares of that company which agreed to purchase and did purchase 77 million shares in the plaintiff from Territorial. They were interested in acquiring those shares through Join Park and in this sense, they were indirectly interested in the shares in question. But that does not mean that they had a community of interest which is required for the application of the equitable principle. The plaintiff alleges that the 1st defendant had conspired with others in taking money belonging to the plaintiff and made use of it to pay for the purchase price of the shares in question. If the plaintiff's allegation can be substantiated, the 1st defendant would be liable to repay that money to the plaintiff. It is not alleged that the 5th third party was involved in the conspiracy or the taking of the plaintiff's money. The fact that the 1st defendant, on a frolic of his own, unlawfully took the plaintiff's money to finance the purchase does not concern the 5th third party who never intended to take the plaintiff's money to pay for the shares. But what is more important is that the 1st defendant has not paid or is not obliged to pay the plaintiff to protect those shares. He is only obliged to repay the plaintiff for what he had unlawfully taken, if the plaintiff can prove its case against him. He is not protecting any common interest which he shares with the 5th third party. I do not think there is any community of interest between them.

24. In my view, there is no application of this equitable principle to the present case and I do not think the 1st defendant is entitled to rely on this principle. The judge was correct in rejecting this cause of action.

Unjust enrichment

25. This cause of action is introduced for the purpose of this appeal and was not put before the judge. This claim is based on the assumption that $127 million was improperly taken from the plaintiff and used to fund the purchase of the shares. It is alleged that the 5th third party had received shares to the value of about $19 million at the plaintiff expense and was to that extent unjustly enriched. It is argued that the plaintiff would also have a claim for money had and received and for equitable tracing into the shares held by the 5th third party. That being the case, the 5th third party would be liable to the plaintiff in respect of the same damage for which the 1st defendant would also be held liable and hence the 1st defendant is entitled to recover contribution from the 5th third party pursuant to s.3 of the Civil Liability (Contribution) Ordinance, Cap.377.

26. The basis of this alleged cause of action is pleaded in paragraph 5 to paragraph 10 in the proposed amended Third Party Statement of Claim. It is important that I should set out some of these paragraphs in order to see whether this cause of action can be sustained or not.

5. Pursuant to the Share Purchase Agreement, the shares were transferred to various transferees nominated by the 1st defendant and the 5th third party as particularized in paragraph 10A of the Re-Amended Statement of Claim herein. In particular, 26% of the shares (20.2 million) was acquired by the 5th third party or held for his benefit in the following manner:-

Particulars

(i) Global Grace	5.8 million
(ii) Gransail	3.3 million
(iii) 13th defendant	10.92 million
	20.02 million

5A (a) The shares in each of the transferees were initially held in the proportions of 74% and 26% for the 1st defendant and the 5th third party respectively.

(b) On or about 28th January 1986 the 5th third party became the beneficial owner of the entire shareholding of Global Grace (which held 5.8 million of the shares) and of Gransail (which held 3.3 million of the shares).

(c) On or about 23rd February 1987, 10.92 million shares out of the shares that were being held by Join Park were distributed to the 5th third party.

6. Consequent upon the 5th third party by Ganton defaulting on repayment of the monthly interest on his loan, in or about May 1987, he disposed of his 20.02 million shares (together with all subsequent share issues, rights and warrants attaching thereto) without having first fully paid up for them whereupon the same were re-possessed by the Bank. It is averred that the 5th third party's said dealing in the 20.02 million shares was for his sole benefit.

27. For the allegation in paragraph 5A(c) that 10.92 million shares were "distributed" to the 5th third party, the 1st defendant relies on a copy of the minutes of a directors meeting of Join Park held on 23rd February 1997 which set out a resolution purportedly giving effect to a distribution of shares to the 5th third party.

28. The basis of this cause of action is that the 5th third party had received shares to the value of about $19 million and was unjustly enriched to that extent at the plaintiff's expense. The 1st defendant's pleaded case as I understand it is this. The 77 million shares were upon completion of the purchase initially transferred from Territorial to various nominees including Join Park, Global Grace and Gransail. Since the 5th third party was the beneficial owner of the entire shareholding of Global Grace and Gransail, he had therefore, by virtue of his shareholding in these two companies, received the 5.8 million and 3.3 million shares in the plaintiff which had been transferred respectively to these two companies. These shares together with the 10.92 million shares which he had received by way of distribution added up to 20.02 million and these represented 26% of the 77 million shares purchased from Territorial. It is alleged that these shares were acquired by the 5th third party or held for his benefit. It is also alleged that he had disposed of these shares and that his dealing with them was to his sole benefit.

29. In my view, it has not been sufficiently pleaded how the 5th third party had received the 20.02 million shares apart from the notional acquisition of 5.8 million and 3.3 million shares by virtue of his shareholding in two of the nominee companies and the so-called "distribution" of 10.92 million shares. However, it has not been pleaded how these 10.92 million shares were distributed to the 5th third party. Although it is alleged that the 5th third party had disposed of these 20.02 million shares, it is not pleaded how he had done so. On the contrary, it would seem that this "disposal" was in fact the re-possession by Ka Wah Bank upon the default of Ganton (one of the companies used to borrow $127 million) to make repayment of the monthly interest. From the pleading, it cannot be said that the 5th third party had received, let alone dealt with, such shares. Further, it cannot be said that he was in any way unjustly enriched. I do not see how the plaintiff would succeed in any claim against the 5th third party for money had and received or equitable tracing. I do not think that the case cited by counsel, Lipkin Gorman v. Karpnale Ltd. (1991) 2 AC 548 can assist the 1st defendant. In my view, there is no question of the 5th third party being held liable to the plaintiff for the same damage. The 1st defendant's cause of action based on statutory contribution is doomed to fail.

Inconsistent dealing with property subject to a trust

30. This cause of action is also a new cause of action and was not placed before to the learned judge. The 1st defendant's claim is this. Since the plaintiff alleges that the 1st defendant had acted in breach of his fiduciary duty in misusing $127 million of the plaintiff's funds, the 1st defendant was a constructive trustee of the said money and the shares purchased with such money were trust property. The 1st defendant does not contend that when the shares were originally transferred by Territorial to the various nominee companies, the 5th third party was aware that those shares were acquired partly by means of the $127 million and were therefore trust property. What the 1st defendant does contend is that the 5th third party would also be liable to the plaintiff on the basis of inconsistent dealing which, as in the case of knowing receipt, does not require the element of dishonesty. It is alleged in paragraph 11 of the proposed amended Third Party Statement of Claim that after the 5th third party had received his portion of the shares in the plaintiff, he became aware that these shares had been acquired by means of the $127 million and that these shares constituted trust money. Alternatively, it is alleged that even if he was not so aware, the 5th third party would have his conscience sufficiently affected to justify the imposition of a trust. Counsel submits that this constituted inconsistent dealing with trust property for which the 5th third party would be held liable to the plaintiff. Hence, he would be liable to the plaintiff in respect of the same damage as the 1st defendant. Consequently the 1st defendant would be entitled to recover contribution against the 5th third party under s.3 of the Civil Liability (Contribution) Ordinance.

31. As to the law on the cause of action of inconsistent dealing with trust property, counsel refers this court to lengthy extracts in Oakley on Constructive Trust, 3rd Edition, Chapter 4 and some of the authorities referred thereto, including El Ajou v Dollar Land Holdings [1994] 2 All ER 685 which was a case on knowing receipt. I do not propose to deal with all the arguments on this issue since they are set out in full in these extracts. Suffice it to say that there is no clear and concluded judicial view on this point in this jurisdiction or in the English jurisdiction.

32. It would seem from counsel's submission that the 5th third party's alleged liability to the plaintiff under this cause of action is based on (1) the 5th third party's receipt and subsequent dealing of the shares in question and (2) his "knowledge" or state of mind which, counsel argues, falls within the 4th and 5th categories of "knowledge" as suggested by Peter Gibson J in Baden v Societe Generale [1993] 1 WLR 509N, namely : knowledge of circumstances which would indicate the facts to an honest and reasonable man and knowledge of circumstances which would put an honest and reasonable man on inquiry. With regard to the categorisation of "knowledge" in the Baden case, it can be noted that there were authorities which held that only knowledge within the first 3 categories are sufficient for certain types of liability while there were other authorities which suggested that any one of the 5 categories will suffice. However, in Royal Brunei Airlines v Tan [1995] 2 AC 378, Lord Nicholls in the Privy Council when he was dealing with the principle relating to accessory liability expressed disapproval of such categorisation :

"'Knowledge' is better avoided as a defining ingredient of the principle, and in the context of this principle the Baden scale of knowledge is best forgotten."

33. I am inclined to agree with this observation. Although Lord Nicholls' remark was made in the context of accessory liability, it is arguable that this may be a relevant consideration in deciding what may be regarded as the ingredients of a claim based on inconsistent dealing with trust property. However, I do not think that it is necessary for me to come to any firm conclusion at this stage. First, this is only an appeal from a striking out application. Secondly, this cause of action cannot, in my view, possibly succeed in this case on the facts as pleaded. This is because even if the 1st defendant can show that the 5th third party had the required state of mind under the principles in the Baden case, I do not think, for the reasons given under the cause of action of unjust enrichment, that it can be said that the 5th third party had received and dealt with the shares in question. On the pleading before this court, there is no basis for the claim that the 5th third party had any inconsistent dealing with those shares. There is no hope that the plaintiff can succeed against him in respect of this cause of action and hence there is no question of the 1st defendant seeking a contribution against the 5th third party under s.3 of the Civil Liability (Contribution) Ordinance.

Limitation

34. There is a Respondent's Notice issued by the 5th third party asking this court to dismiss the appeal on the ground that the 1st defendant's claim against the 5th third party is nothing more than a monetary claim and as such, is statute-barred.

35. Before this court, counsel for the 5th third party does not seek to press this point. Very briefly, he says that the 1st defendant had deleted all references to indemnity and contribution from his proposed amended Third Party Statement of Claim. This shows that it is nothing more than a monetary claim which is clearly time barred.

36. In view of my conclusion on this appeal, I do not think it is necessary to deal with this point in any detail. Suffice it to say that the fact that a pleading does not refer expressly to the words indemnity or contribution does not mean that there is no claim based on these two causes of action, if what is pleaded clearly supports such contentions. As I see it, the 1st defendant does rely on indemnity and contribution. There is therefore no question of applying the provisions of the Limitation Ordinance.

Conclusion

37. For the reasons given above, I am of the view that all the four pleaded causes of action relied upon by the 1st defendant cannot succeed. The trial judge was right to strike out the Third Party Statement of Claim on the first two causes of action. The two new cause of action are also not sustainable. In the circumstances, I would dismiss the appeal. I would also make an order nisi for cost of the appeal to be paid by the 1st defendant to the 5th third party.

Leong JA :

38. I agree.

Suffiad J :

39. I agree.