XCHRX STAR PLUS LTD. v. BORNEO MARITIME LTD.

HCCL115/1997 & HCCL155/1997

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

COMMERCIAL ACTION NOS.115 AND 155 OF 1997

-------------------------------

----------------------------

__________________

J U D G M E N T

__________________

1. There are before the court two summonses in the two actions herein, each dated 2 February 2001. These summonses seek leave to amend the defences in these cases, both of which involve the misdelivery of goods in Russia and consequential loss, which loss appears to have occurred through some form of theft.

2. This is the Commercial Court. That has no particular resonance in itself, save to note that in this court in almost all cases concern is not usually generated as to pleadings. That is not to say that pleadings do not have their place. But provided that each party knows what the other party's case is, the court's interest then becomes almost exclusively confined to solving the dispute as quickly and as expeditiously as possible.

3. It is a matter of some surprise, therefore, given the way this court has functioned over the last four years or so, that we should now have a case wherein the issue of amendment of pleadings has been vigorously fought. It might be said with justification that such opposition on the part of the plaintiff was not without reason in this case. Not only did the whole issue of amendment arise out of something said by the solicitors for the defendant upon an application for exchange of expert witness statements, but curiously the document now sought to be put in in each of these actions by way of amendment is substantially different from the document which was before this court when it first heard these summonses on 9 February of this year. I will not rehash in detail the argument that took place on that date, albeit I note that Mr Shieh who appears for the defendant and Mr Heath who appears for the plaintiff in these actions today both then were present.

4. Suffice it to say that on the occasion of the earlier hearing, the court was not satisfied with the formulation of the amendments then produced for its inspection, and adjourned the application for affidavits to be put in canvassing, inter alia, the reasons for the late amendments then sought. Affidavits now have been filed on behalf of both parties. But, as I have earlier noted, strangely the document that now is sought to be put into play by way of amendment is substantially different from the proposed document that was originally in issue. Mr Shieh, carefully and with signal fairness, has taken me through this new document. The 'freight forwarder's' defence - if I can use that term - which was present in the original draft is no longer pursued, but two further new defences have been added. They have now been referred to as the 'an agreed method of delivery' defence (which, I am told, is peculiar to Action No.155), and another new line which is common to both actions, namely the 'compromise' defence. These defences arise in addition to the 'under-invoicing' defence, which figured in the original proposed amended draft, and which again is common to both actions.

5. Mr Shieh tells me, and I am grateful to him for his frankness, that this "revamped pleading" (to use his terminology) has emerged because what was originally an "underwriter-driven case" has now become a case where the assured client has been carefully examined as to what precisely occurred, because by now it had become clear that settlement was not on the cards. I pause to comment that this is a somewhat cavalier way of conducting commercial litigation, but I recognize that sometimes these things do happen.

6. The question for today, therefore, is whether this revamped Defence and Counterclaim should be permitted to stand, and I have, of course, been reminded of all the usual principles relating to amendment, together with reference to a recent case wherein Godfrey JA in the Court of Appeal made some fairly tart references to late amendments.

7. Mr Heath appears today to object to certain of these amendments. He takes particular exception to the 'compromise' defence, reference to which, he says, has appeared nowhere in the papers until now, and he also objects to the other completely new line of approach, the 'agreed method of delivery' line. The substance of his argument is that this is all too much, too late, and although admittedly no vested interest of his client has been affected, he argues that it is his client's right to get to trial with expedition, and that this has now been disrupted together with the costly requirements of additional pleadings and, quite possibly, further discovery.

8. I can understand his irritation. What he did not say to me, however, was that in these particular circumstances these amendments now objected to have caused irrevocable prejudice to his client in terms, for example, of being unable to obtain evidence in connection therewith. The thrust of his submission went to delay generally.

9. The court of course is faced with a balancing process. The instinct of the Commercial Court at any rate is to get everything out into the open in any commercial dispute, to pick it apart, to see and hear the witnesses and to decide the case as fairly as it can in light of the evidence before it. Despite Mr Heath's best efforts, and, as I say, I can understand why he has taken exception to some of the things now pleaded, I have decided to permit the amendments as now mooted, although as I remarked to Mr Shieh during argument, I do not now expect to see this case further amended on the part of the defendant. This is their third go at it, so to speak. They have the services of highly competent counsel, and now they have gone behind the underwriter to the client to obtain detailed instructions. Although I do not restrict myself in any way, I would be most surprised if the court were to look favourably on any further alteration to the case which, after all, is not a case of particular complexity involving, as I have said, misdelivery of goods in Russia and consequential loss to the plaintiff.

10. So my Order on these applications is thus : the defendant is to have leave to amend its Defence and to plead the Counterclaim in both actions. The plaintiff is to have leave to amend consequentially its Reply and, as a matter of necessity, to plead a Defence to Counterclaim.

11. Naturally the costs of and occasioned by the necessity consequentially so to amend must be to the plaintiff in any event, such costs to be taxed if not agreed. I will hear the parties upon any further directions that need to be made as a result to this primary decision.

12. I turn now to the costs of the two hearings, that is, the original hearing of the summons on 9 February 2001, and the adjourned hearing this morning, that is, 4 October 2001. To his credit, Mr Shieh does not demur that the costs of the hearing on 9 February should be to the plaintiff in any event, to be taxed if not agreed. The reason is quite simple, as he recognizes : the draft originally put into play has now been further considerably amended, that earlier hearing effectively was thrown away, and there is no reason whatever why the plaintiff should be in a position other than to have the costs of that day.

13. As to the hearing this morning, which has taken the best part in about an hour and three-quarters, Mr Shieh says, predictably I suppose, that he has won the argument and that he wants his costs. Mr Heath says that he agrees that this is the normal rule, but that this is an odd case and that he is more than justified in coming to court and saying his piece, even though what he said ultimately did not hold sway.

14. Costs are always in the discretion of the court, which looks at the surrounding circumstances and decides accordingly. On this occasion I do not agree that because the defendant ultimately has won that it should have its costs. The sequence of events which I have briefly set out, together with the undoubted fact of two late emerging defences, mitigate against this. What then should the court do? Should the court give Mr Heath his costs as he requests? I do not think that this is justified, tempted though I may be. I have considered several formulations for costs this morning. But in the end, in my view the fairest order is that the costs of today are to be costs in the cause, such costs to be taxed if not agreed.

15. That has disposed, I think, of the applications to amend and of outstanding costs matters. Mr Heath has alluded to other matters that need to be dealt with by way of directions, and I will now hear the parties on that subject.

[Submissions from counsel]

16. I have now had an opportunity to hear from the parties about various directions. In my view the most sensible course is to let the solicitors for the plaintiff and defendant sit down and work out a timetable for the constitution of the further pleadings as are now required and, if necessary, for any further discovery. Naturally, I will attend to any procedural summons, if such be needed, as soon as possible, but I would have thought that it is highly unlikely to have to meet within the next month or so. Nor will there yet be any necessity to make any direction as to expert witness statements, and indeed, it may well be that the question of expert witness statements can also be the subject of a further Consent Order between the parties.

17. That being all for today, I thank Mr Shieh and Mr Heath for their assistance.