TIN SHUI WAI DEVELOPMENT LTD v. ATTORNEY GENERAL

Construction List 5 of 1987

IN THE SUPREME COURT OF HONG KONG

HIGH COURT

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BETWEEN

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JUDGMENT

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1. I now have to consider an application by the plaintiff for leave to amend the statement of claim to raise a plea of estoppel. The nature of the estoppel is novel, at any rate, so far as English law is concerned; so much is conceded by the plaintiff. But the plaintiff relies on an Australian case decided in 1988, Walton Stores (Interstate) Limited v. Meyer, reported in the Australian Law Journal Reports, Vol. 62 at page 110 and in the Australian Law Reports, Vol. 76 at page 513. The case is also reported in the Commonwealth Law Reports. It does seem to have considerable significance in the development of this branch of the law.

2. In the statement of claim the plaintiff sets out in paragraph 10 a number of different matters upon which it relies in support of its suggestion of an implied term in the agreement between the parties. In the proposed amendment, it seeks to repeat and rely for its suggested estoppel upon the matters set out in that paragraph. It proposes to allege that it entered into the 29th July 1982 agreement with which the action is concerned .

"upon an assumption induced by the Government that the Government intended to affect the legal relations between the parties, in that it would deliver to the plaintiff by the 1st July 1985 sufficient of the 38.8 hectares formed and serviced and ready to be built upon to enable the plaintiff then to start its building development and that the remainder thereof would be delivered in such condition at reasonable times thereafter."

The plaintiff proposes further to allege:

"By reason of the matters aforesaid, the Government knew that the plaintiff was entering into the July 1982 agreement in reliance upon the aforesaid assumption."

And lastly the plaintiff proposes to allege:

"The aforesaid assumption has not been fulfilled as set forth in paragraphs 13 to 15 of the Statement of Claim, whereby the Government has acted unconscionably, and the plaintiff has suffered and will suffer loss and damage as hereinafter pleaded ."

                (Paragraphs 13 to 15 of the Statement of Claim are the plaintiff's allegations of breach of contract.) If (1) the Government represented to the plaintiff , or induced the plaintiff to assume, that it would clear, form and service the land to be regranted to the plaintiff within 3 years from the date of the July 1982 agreement; (2) the Government subsequently dealt with the plaintiff over that matter in a manner contrary to generally accepted notions of good conscience and fair dealing, and (3) the plaintiff acted to its detriment on the faith of this representation or assumption, then, says the plaintiff, it is arguable that the plaintiff has against the Government a remedy ("compensation for detriment") for the injury done to it.

3. I do not have to consider at this stage whether this case is made out. I have simply to consider whether it is arguable. If it is, I ought to grant leave to amend. If it is not, I ought to refuse it. It is wrong to grant leave to make a useless amendment to a pleading.

4. The defendant objects to the proposed amendment on the ground that it discloses no cause of action known to the law. He says there is no jurisdiction to grant the remedy which the plaintiff seeks, "compensation for detriment", in the same amount as it has hitherto claimed damages for breach of contract. Furthermore, says the defendant, the facts upon which the plaintiff relies for the proposed plea of estoppel do not begin to support any such plea.

5. It is, I think unnecessary and, indeed, undesirable for me to express any concluded view (or even, I suppose, any tentative view) as to the law which it will be my duty to apply at the conclusion of the hearing to the facts of the case as they would have emerged in the evidence. It is, however, my duty to rule now upon this matter of amendment. I propose to rule (and I do so without any hesitation) that the plaintiff ought to be given leave to make this amendment. I do so recognising the formidable obstacles which (as Mr Derek Wood Q.C. for the defendant has convincingly demonstrated) will lie in establishing the case sought to be raised by the amendment both on law and fact.

6. On the matter of law, the plea is novel to English Law and is perhaps novel in any common law jurisdiction. As Mr Wood was able to show, the nature of the estoppel relied on by the High Court of Australia in Walton Stores (Interstate) Limited v. Meyer is one which can readily be discerned in a case where there is no contract at all between the parties, and the plaintiff seeks to rely on the estoppel to preclude the defendant from denying its existence, or where there is an existing contract between the parties, and the plaintiff says that the defendant is estopped by his conduct from relying upon some term in it which would work to the disadvantage of the plaintiff were it not for the estoppel in question.

7. The Australian case does not deal, because the point was not in issue upon the facts of that case, with the situation we have here where the parties have in fact entered into a contract and the estoppel sought to be raised is based upon something which has been said or done during the course of pre-contractual negotiations. The case for the plaintiff on this aspect of the matter is not only novel, but if correct, could operate to drive a coach and horses through the parole evidence rule. There are few occasions in which the parties, notwithstanding that they have chosen to enter into a contract, may nevertheless be allowed to refer to something outside the contract altogether. Examples given by Mr Wood were cases of ractification, or cases in which the plaintiff had succeeded in establishing a collateral contract.

8. I accept that the difficulties in the plaintiff's way therefore are, indeed, formidable; but, as I have said, I have no hesitation in determining that the plaintiff ought to be entitled to raise its case of estoppel, on the facts already pleaded, as a matter of argument, and to endeavour to persuade the court that its analysis of the position on this basis is correct.

9. If one looks at the factual material on which the plaintiff relies for this plea, the difficulties in the plaintiff's way are, as it seems to me, redoubled. It is, of course, one thing to assume from the conduct of your opponent that he is agreeing to an assumption which you have made; it is quite another so to assume when in terms he has described the assumption as tentative only. It may be that the facts of the case, when they come to be examined, will prove to be too strong for the plaintiff on this aspect of the case; certainly, there is room for so thinking on an analysis of the documents so far. But as I have said it is unnecessary and undesirable for me to pre-empt the decisions to which I shall have to come on that aspect of the matter, and I do not do so. For the reasons I have endeavoured to state, I propose to give the plaintiff leave to make this amendment.