WING HAN TRADING CO. LTD. v. TANG YAN KIT AND ANOTHER

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JUDGMENT

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Sir Derek Cons, Ag. C.J., delivered the reasons of the Court:

1. On the 28th of last month we dismissed with costs an appeal against the decision of Godfrey, J., upholding a decision of Master Jones, to refuse to amend the statement of claim, saying we would give our reasons later, which we now do.

2. The claim, which was for damages or, at the plaintiff's option, an account of profits, was by, if we may use the old-fashioned terms, a master for breach of fiduciary duty by his former servant, namely stealing his master's business. The 2nd defendant is a limited company through which this was done.

3. A defence and reply were filed in due course. Sometime later, after what the judge below described as interlocutory skirmishes, judgment was entered by consent for damages to be assessed and costs to date, the plaintiff presumably having exercised the option he had claimed in the statement of claim.

4. Still later the plaintiff sought leave to amend his statement of claim, accepting that if it were granted the consent order would have to be set aside, by expanding the facts alleged relevant to quantum and adding claims for exemplary damages and interest. As we have indicated, both master and judge refused.

5. The notice of appeal against the decision of the judge asked that his order be set aside and that the plaintiff be given leave to amend the statement of claim either in accordance with the draft submitted to the master, and then the judge, or to such limited extent as would exclude therefrom any claim to exemplary damages.

6. Seven days before the appeal came on for hearing the plaintiff gave notice of his intention to apply for leave to amend the. notice of appeal to delete therefrom all references to the claim for exemplary damages, i.e. to say, by the appeal the plaintiff sought only partial amendment. At the hearing the defendant raised no objection to this course and we accordingly gave leave. Thereafter the appeal proceeded effectively only to determine an appropriate order as to costs.

7. No application for partial amendment was made to the judge below. He exercised his discretion upon submissions for total amendment or nothing. In preferring the latter he was influenced by three factors. The first was a combination of the "very important public interest in the finality of litigation" and the deprivation to the defendant of the benefit of an arrangement made some nine months earlier. The second was the novelty, in the circumstances, of the claim for exemplary damages which gave it, in his judgment, "chances of success ... remote in the extreme".

8. The judge's exposition of the third factor was expressed in terms which include references to election, waiver and estoppel by representation. But taken as a whole, and bearing in mind that this was an extempore judgment, we think he was saying no more than, to put it in the vernacular, the plaintiff, albeit unwittingly, had led the defendant up a garden path.

9. In a very skilful submission which would have done credit to a medieval schoolmaster, but which at times tended to confuse jurisdiction with discretion, Mr. Yu, who appeared for the plaintiff, but not below, sought to persuade us that with regard to factors (1) and (3) the judge erred in principle. He did not challenge the validity of the second factor.

10. With respect to him we are unable to agree. Although the judge treated the first and third as separate considerations, they are in fact only different aspects of the same thing, the earlier consent to judgment. That was a major fact in the history of the litigation and one which the judge was perfectly entitled to take into account when exercising his discretion whether or not to allow, at that late stage, the area of litigation to be expanded.

11. That conclusion is fatal to Mr. Yu's submission - as to which as such we express no opinion - that although the judge's decision could be upheld on the basis of factor (2) above, he had sufficiently strayed in principle with regard to factors (1) and (3) to justify this Court in setting aside his decision and substituting that of its own (which Mr. Yu suggested should be for partial amendment).

12. It was for these reasons that we dismissed the appeal. The question of costs, which was extensively canvassed, naturally followed the event.