LO KA CHUN v. LO TO AND ANOTHER

IN THE COURT OFAPPEAL

1985 No. 44
(Civil)

BETWEEN

	LO KA CHUN otherwise known as BRIAN LO	Plaintiff
	And
	LO TO	1st Defendant
	LAW TSOI	2nd Defendant

 

Coram: Roberts, C.J., Cons, V.P. & Fuad, J.A.

Date of Hearing: 15th December, 1986

Date of Judgment: 2 January 1987

 

_______________

JUDGMENT

_______________

 

[Costs - taxation - whether right to immediate taxation and payment - use of slip rule.]

 

Roberts, C.J.

Background

1. On the 20th February, 1985, Clough, J. made the following Order -

“(1) The Plaintiff is applications by Summonses both dated 2nd July, 1984 for leave to serve on the 1st and 2nd Defendants a new statement of Claim and ancillary directions and for leave to amend the Writ of Summons be dismissed with costs with certificates for two Counsel;

(2) The Action herein be dismissed with costs save that no order as to costs of the 1st Defendant’s appeal against the Orders of Master Clay dated 17th January, 1984 and 1st February, 1984 and that the Orders for costs below do stand;”

2. The plaintiff appealed and succeeded to the extent indicated in the Order of this court, dated 16^th October, 1985, which was drawn up in the following terms -

(1) The Plaintiff’s appeal be allowed to the extent that:

(i) the Plaintiff to have leave to serve the Statement of Claim (9th version) in the form annexed to the said Notice of Appeal with the exception of Paragraph 36, any references thereto on the Pleadings and Prayer 7, which should all be struck out;

(ii) The said Order of the Honourable Mr. Justice Clugh be set aside but his Order as to costs do stand.

(2) Leave be given to the Plaintiff to amend the Writ of Summons in terms of Paragraph (1)(i) hereof.

(3) The Plaintiff to serve the Statement of Claim referred to in paragraph (1)(i) hereof on the 1st Defendant and the 2nd Defendant within 7 days from the date hereof.

(4) The 1st Defendant and the 2nd Defendant to serve their Defence within 10 weeks thereafter.

(5) The costs of this Appeal be Plaintiff’s costs in the cause.”

Use of the Slip Rule

Counsel for the plaintiff by motion under Order 20 rule 11 of the Rules of the Supreme Court, commonly known as the Slip Rule, sought to correct what were said to be ambiguities in the Order of 16^th October.

3. We note that the use of the Slip Rule power is limited to rectification of an accidential slip or omission and does not entitle a court to reconsider a final and proper order once it has been perfect6ed or to make variations of a significant nature to it. See R. v. Cripps, Ex parte Muldoon & Others[1].

Supposed “errors”

4. Counsel for the plaintiff by argued that paragraph 1(ii) of the Order of 16th October was ambiguous in two respects -

(a) it did not make it clear whether or not paragraph (2) of Clough, J's. Order "that the action herein be dismissed with costs” would still stand in respect of the costs of the action, since the plaintiff had succeeded on the appeal in having; the action restored;

(b) it did not make it clear whether paragraph (1) of Clough, J’s. Order, the effect of which was to provide that costs payable by the plaintiff were to be taxed and payable forthwith would still stand, or whether such taxation and payment should await the outcome of the action as a whole.

First “error”

5. Counsel for D.2 argued before us that there was no ambiguity in our Order and that it provided, as Clough, J’s. Order had done, for the payment of costs by the plaintiff both in relation to the dismissal of the plaintiff's applications and for the general costs of the action.

6. However, counsel for the plaintiff and counsel for D.1 were agreed that since the plaintiff had succeeded 3 on the appeal, in having the decision to dismiss the action set aside, it must follow without more that the award of costs which followed the dismissal must lapse, leaving the general costs of the action to abide its result and be dealt with at a later stage.

7. Despite this concession by counsel for D.1, D.1's solicitors presented their bill for taxation on the oasis that the Order of 16th October was in such terms that the general costs of the action, as opposed to those of the applications, were also intended to be paid by the plaintiff.

8. The relevant portion of this court's judgment on costs was in the following terms -

"In considering the question of costs, we take into account the chequered history of the pleadings and the manner in which the plaintiff has changed his grounds or expanded or amended them.

Obviously a plaintiff ought not to be punished for the vagaries of his legal advisers if, in the end, he has placed triable issues before the court. But this must not be allowed to bear unreasonably upon the defendant, nor imposed upon him costs which he would not have incurred if the plaintiff's case had been pleaded much earlier in the manner in which it now stands.

The judge ordered that the costs of the proceedings before him in January and February should be paid by the plaintiff.

The history of this matter persuades us that we should not disturb that order, even though the plaintiff has largely succeeded in the appeal.

The costs of the appeal shall be plaintiff's costs in the cause.

Statement of Claim to be served within 7 days. Defence to be served within 10 weeks thereafter.”

9. The reference in the third paragraph of the passage quoted to “the costs of the proceedings before him in January and February should be paid by the plaintiff” is clearly a reference to the applications which were then before the judge. We are, therefore, satisfied that we intended, by stating that Clough, J’s. Order as to costs should remain, to refer to the costs involved in those applications and not to the general costs of the action, which should be taxable and payable in the usual manner at the conclusion of the action.

Time of payment

10. The effect of Clough, J’s. Order, since at that stage he was striking out the action, was that the costs awarded against the plaintiff would have been taxable and payable forthwith. It is suggested that our Order, as drawn up, is unclear as to when costs shall be taxed and payable.

11.According to notes produced by counsel, this matter was raised at the conclusion of the hearing before us, by counsel for D.1, who asked if costs were still to be payable forthwith.

12. Our recollection of this aspect of the matter is reasonably clear. We do recall that counsel asked whether costs should be payable forthwith and that we intimated that costs should be payable in the normal course of events, that is to say, at the conclusion of the action.

13. Because Clough, J’s. Order had been based on a dismissal of the action, it is understandable, perhaps, that when we ordered that his Order for costs should not be disturbed, solicitors for the defendants should have taken the view that it was not be disturbed in any respect, including that of immediate taxation and payment.

14. We believe that we resolved this doubt at the time of the appeal and clearly indicated that costs should be taxed and payable at the conclusion of the restored action.

15. Our Order, therefore, needs no alteration since our observations should make it clear as to what was intended.

16. There will be no order as to costs in relation to this motion under the Slip Rule.

 

 

Mr. F. Ferris, Q.C. with Mr. A. Neoh and Mr. J. Lam (S.K. Wong & Co) for Plaintiff/Appellant

Mr. N. Thomas, Q.C. with Mr. Ronny Wong (T.S. Tong & Co.) for 1st Defendant/1st Respondent

Mr. Henry Fan (Denton, Hall, Burgin & Warrens) for 2nd Defendant/2nd Respondent.

---

[1]  [1984] 1 Q.B. 686

CACV000044A/1985

IN THE COURT OF APPEAL

1985 No.44 (Civil)

BETWEEN:

	LO KA CHUN otherwise known as BRIAN LO	Plaintiff
	and
	LO TO	1st Defendant
	LAW TSOI	2nd Defendant

Coram: Roberts, C. J., Silke & Barker, JJ.A.

Date of judgment: 21st January, 1986.

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JUDGMENT

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Roberts, C. J. -

1. An appeal will lie, at the discretion of the Court, under Rule 2(b) of the Hong Kong (Appeal to the Privy Council) Order in Council, 1909, if in the opinion of the Court, the question involved in the Appeal is one which, by reason of its great general or public importance, or otherwise, ought to be submitted to Her Majesty in Council for decision.

2. Mr. Millett has argued, on behalf of the defendants, that there are questions involved in the appeal of great general or public importance.

3. No doubt these questions are arguable and are of great importance to the parties but we do not find them to be of great general or public importance. And we construe the phrase "or otherwise" in Rule 2(b) as indicating that leave should be given only in special circumstances of some other character which we do not see as being present here.

4. Even if we had been disposed to find that the questions involved were of great general or public importance, we would not have been prepared to exercise the overriding discretion which is vested in us.

5. We think that the interests of justice are better served by this matter coming to trial as soon as possible when, no doubt, the arguments advanced by Mr. Millett will have an influence on the course of the trial. Indeed, many of his arguments were ones that, in our view, would have been better reserved for that occasion, though we understand why he felt constrained to put them before us.

6. We refuse the application and order that the respondent shall have the costs of the application.

Representation:

Mr. J. Millett, Q.C. with Mr. R. Wong (T.S. Tong & Co.) for D. l.

Mr. F. M. Ferris, Q.C. with Mr. A. Neoh and Mr. J. Lam (S. K. Wong & Co.) for the Plaintiff.

CACV000044/1985

IN THE COURT OF APPEAL

1985 No. 44 (Civil)

BETWEEN:

	LO KA CHUM otherwise known as BRIAN LO	Plaintiff
	AND
	1. LO TO	Defendants
	2. LAW TSOI

Coram: Roberts, C. J. and Cons & Fuad, JJ.A.

Date: 16, 17, 18, 19 September & 16 October 1985

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JUDGMENT

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Roberts, C. J. -

Preliminary

1. This is an appeal from the order of Clough, J. made on the 28th February, whereby he dismissed the application of the plaintiff (the appellant in this appeal) for Leave to serve on the two defendants (respondents in the appeal), a new Statement of Claim and an amended writ of summons.

2. The judgment of Clough, J. is reported in (1985) H. K. L. R. 207.

Background of the action

3. The plaintiff who was born on 5th October, 1951 is the eldest son of Lo Sum, who died on 16th October, 1970.

4. Lo To, the first defendant (D.1) and Law Tsoi, the second defendant (D.2) were brothers of Lo Sum (the deceased) and are the plaintiff's uncles.

5. After the war, the deceased carried or business with D. 1 and D.2 in the Cheoy Lee Shipyard and the Hip Hing Cheung Shipyard ("the shipyards"). They also joined together in various other companies, which were said to have been formed with partnership funds derived from the shipyards.

6. In August 1970, the deceased was warned that he did not have long to live. He made a will, dated 14th August, 1970, under which he bequeathed to the plaintiff all his real and personal estate, appointing him also his executor.

7. On 18th August, 1970, at the instance of the deceased, D.1 signed a document ("the undertaking") in which he stated that he was willing at any time, under the direction of Lo Sum, to transfer one third of the shares in the shipyards and 124 shares in Leung Fung Enterprises "to be under the name of Lo Sum or under the name of the person appointed by him as the beneficiary." The undertaking concluded ''if because of change of circumstances (a euphemism for death) then until his son Ka Chun grows up, the shares will be transferred to his son for him to take up. This is proof."

8. Before his death, the deceased, according to the Statement of Claim, signed transfer forms relating to some of the shares owned by him, and executed deeds of dissolution relating to the shipyards.

9. In the letter dated 17th June, 1974 ("the 1974 letter") addressed to the plaintiff, D.1 acknowledged that he had taken care of the deceased's estate after Lo Sum's death and had ''written down that this estate will be given back to you when you grow up".  He went on "I therefore decide to give you or Ka Chun back your late father's business that he had left."

10. In essence, the plaintiff's claim is that D.1 has never fulfilled his obligations and that he and D.2 remain in possession of property which should have been transferred to him in accordance with the instructions of the deceased.

History of Action

11. The action was begun by a writ of summons which was dated 26th April, 1980. The Statement of Claim was filed on 7th July 1980, amended (2nd version) on 28th July, 1980, and re-amended (3rd version) on 25th September, 1980.

12. On 9th May, 1984, D.1 gave notice of motion to strike out the 3rd version. On 22nd May, 1984, Clough, J. ordered that the 3rd version be struck out and that the plaintiff's action be dismissed, unless the plaintiff applied to serve a new Statement of Claim within six weeks, a period which was later extended.

13. On 2nd July, 1984, the plaintiff issued two summons, one for leave to amend the Writ and the other for leave to serve a new Statement of Claim (4th version). Clough, J. heard both summons from 4th to 12th January, 1985, making the orders which are the subject of this appeal on 28th February, 1985.

Hearing before the Judge.

14. Although the plaintiff's application sought leave to serve the 4th version, a revised version of it (5th version) was filed on 3rd January, and a further revision on 4th January (6th version).

15. During the hearing before Clough, J., two further versions were filed on 7th and 8th January (7th and 8th versions); and counsel for the plaintiff made a number of oral concessions, purporting to abandon some paragraphs of the then latest version, and describing others as 'vulnerable', a word apparently used to connote those parts of the claim in which he had little faith though he was not prepared to abandon them. These concessions were embodied in the 9th version, which was furnished to the court and to the defendants, under cover of a letter from the plaintiff's solicitors dated 19th January, 1985. Both judgments are based on the 9th version.

16. Towards the end of argument on the plaintiff's summons, counsel for D.1 invited the judge to take account of the manner in which the action had been conducted by the plaintiff and to exercise the court's inherent jurisdiction to dismiss the action as being oppressive and an abuse of the process of the court.

17. On 28th February, in the first of two judgments delivered on that date, the judge dismissed the plaintiff's two summons and invited further argument on the question of whether he should dismiss the action. This course having been followed, the judge dismissed the action under the inherent jurisdiction of the court in a second judgment.

Ground for decision

18. The judge considered the long and detailed arguments advanced by counsel on both sides with scrupulous care and his exhaustive judgment shows the meticulous attention which he gave to the issues raised.

19. In his first judgment, the judge finds that the "plaintiff has failed to plead his case in a supportable manner". In his second judgment, he repeats the same phrase. We interpret it as meaning that the pleadings, as they stood in the 9th version, disclosed no cause of action.

20. This interpretation can be said to be supported by passages in both judgments, which express the judge's view that the plaintiff may have a genuine cause of action but that it had not been properly formulated -

(a) "	Furthermore it seemed to me then, as indeed it does now, that the existence of the Undertaking and the 1374 latter indicated that this was s case which should be tried and in which the expertise of counsel should be able to produce triable issues in conformity with the rules of pleading." (First judgment).
(b) "	Now I remain of the view, as expressed in my judgment, that this is a case where the documents show that the Plaintiff may have a genuine claim if it can be formulated in a supportable manner." (Second judgment).

21. As the judge had given the plaintiff the opportunity on 22nd May, 1984, to "formulate a supportable claim", it must have been the ultimate failure of the plaintiff, in the 9th version, which persuaded him that there had been an abuse, taking this failure into account as part of the history of the action. We assume that, if he had decided that the 9th version did disclose a cause of action, he would not have exercised the inherent power of the court to strike out.

22. With the latter assumption, we agree. While there can be no doubt that there are substantial differences between the various versions of the Statement of Claim, we do not consider that this, by itself, is sufficient to establish mala fides on the part of the plaintiff, of such a grave nature that he should be deprived of access to the courts on the ground that the progress of the action has amounted to an abuse of the process of the court.

Plaintiff's "changing case".

23. The history of the plaintiff's pleadings reveals an undesirable degree of vacillation, which has made it difficult for the defendants to prepare their defence, though whether this should be ascribed to changing instructions or to the differing views of a succession of legal advisers, as to the manner in which the plaintiff's claim should be presented, is a matter for speculation.

24. Much of the argument advanced on behalf of the defendants before the judge, and indeed before us as well, consisted of a detailed dissection of the various editions of the Statement of Claim, illustrating what was said to be the "Plaintiff's constantly changing case".

25. Undoubtedly there have been substantial shifts of emphasis in the plaintiff's case; new grounds of claim have been introduced or withdrawn over a long period. It is, perhaps, tempting to find that there has been more than enough vacillation and that the time has come to shut the door on the plaintiff.

26. To some extent a concentration on the differences between the various versions had drawn attention away from the main issue. This is whether the 9th version discloses a cause of action which, if established as pleaded, could succeed, the view most favourable to the plaintiff being taken of the law and facts as pleaded.

27. As the judge observes, the existence of the undertaking and of the 1974 letter indicate that "this is a case which should be tried". If this is his view, how much more would it be that of the plaintiff, who would surely question the virtues of a system which denies him a hearing, before he reaches the door of the court, even though the judge has stated his opinion that triable issues exist, because his legal advisers have failed to use a formula of words which would satisfy the judge.

28. It therefore behoves a court to approach an application to strike out with the greatest caution. Only if it is clearly established that no cause of action has been adequately pleaded should such a drastic step be taken.

29. When using the phrase "adequately pleaded" we mean no more than that the essence of the plaintiff's case should emerge with sufficient clarity to be identified for what it is.

30. We have borne these factors in mind when examining the 9th version to see if it contains triable issues on its face.

Plaintiff's five "causes of action"

l.     "The true agreement" [Paragraphs 28 and 29 and Prayer (3)]

31. It is convenient to follow the judge's classification of the Statement of Claim into five claims.

32. The first of these is that D.1 holds the interest of the deceased in the shipyards, which were transferred by deeds and transfers, upon trust for the plaintiff or for the estate of the deceased. It is asserted that the transfers and deeds did not embody the true agreement between the deceased and D.1, which was that D.1 should hold Lo Sum's interest and shares in the shipyards on trust for the deceased or the plaintiff.

33. In support of this allegation, reliance is placed, in paragraph 28, on paragraphs 23, 24 and 25, where reference is made to the undertaking, signed by D.1 on 19th August, 1970. Relevant to this claim is paragraph 41, in which there is a reference to the 1974 letter.

34. The judge struck out this part of the pleading, saying that it "is embarrassing and cannot stand". He found that Order 18 rules 7(1) and 12(1)(b), had been offended by the failure of the plaintiff to give particulars of the true intention of the parties, as alleged in paragraph 21 and repeated in paragraph 28.

35. This seems to us to take an unnecessarily strict view of the effect of paragraph 28, which avers that the true agreement, i.e. the reflection of the parties' intent, is to be implied from the facts and circumstances in paragraphs 23, 24 and 25.

36. The undertaking deals with only part of the assets referred to in paragraph 28; this may well be a serious obstacle in the way of the plaintiff at the trial, but the fact that two claims overlap, the greater encompassing but extending beyond the smaller, is not a sufficient ground for disallowing either.

2.    The implied or resulting trust. [Paragraphs 30 and 31 and prayer(4)]

37. This claim alleges that D 1 was a volunteer, as no consideration ever passed, or was intended to pass, to the plaintiff, and that D.1 therefore holds the deceased's interests in the business and his shares upon to implied or resulting trust for the deceased's estate (or for the partnership).

38. The judge rejects this claim on the ground that the allegations of intent were not particularized. Again, though the pleading could have been better expressed, we consider that the intention referred to in paragraph 30, which must be the same as that in paragraph 28, was sufficiently particularized.

3.    The oral promise [Paragraphs 32 and 34 and Prayer (5)]

39. The judge rejects this part of the Statement of Claim since it depends upon those parts of paragraphs 23, 24 and 25 which refer to a promise and inducement.

40. Paragraph 32 alleges an oral statement by D.1 to transfer back the interests under the deeds and transfers on request, as pleaded in paragraphs 23 and 24, which set out the circumstances in which the oral promise is said to have been made.

41. The judge states in his finding on this part of the claim, that paragraphs 23 and 24 "have been disallowed". The reasons for this appear to be -

(a)	That the allegation of promise or inducement had not appeared before the 4th version,
(b)	That they were matters to be inferred from what occurred in August to October 1970, ant from the undertaking and the letter, and that the documents, circumstances and facts from which the promise should be inferred had not been pleaded.

42. The allegations did not appear before the 4th version in July 1984. But this is not of itself a sufficient reason for rejecting them, even though their lateness may have lent weight to a submission that they were not made in good faith and should be struck out as an abuse of process.

43. So far as the circumstances of the promise and inducement are concerned, paragraphs 23 and 24 state when and where the promises and inducement occurred and what they were. This is surely sufficient for D.1 to know the basis of this part of the plaintiff's claim and to raise a triable issue.

4.    Deeds were executed in consideration of the Undertaking [Paragraph 35 and prayer (6)]

44. Here the plaintiff relies on a contractual relationship, alleging that the deceased executed the deeds in consideration of D.1  executing the undertaking, and that D.1 is thus bound by the Undertaking to transfer the interests stated therein to the deceased's estate or to the plaintiff; alternatively, that D.1 was therefore constituted a trustee for the plaintiff, or for Lo Sum's estate, of the interests stated therein.

45. The judge rejects this part of the pleadings on the ground that it is "embarrassing and lacks essential averments of facts." It is, in a sense, linked with his rejection of paragraph 28, save that it relates to the narrower class of assets mentioned in the undertaking.

46. It was submitted to us, and with this we agree, that this part of the claim is complete and sufficiently stated to constitute a valid issue, on which the plaintiff could succeed and which gives the defendants adequate notice of this part of the case against them.

5.    Undue influence [Paragraph 36 and Prayer (7)]

47. The judge rejected the plea of undue influence on the ground that no sufficient explanation had been given for the failure to raise it earlier.

48. It is well established that a plea of fraud, raised at a later stage, should not be permitted without good cause for the delay being shown. The allegation of undue influence is similar, in the sense that it also depends upon an assertion of conduct of a questionable nature on the part of D.1.

49. We think that the same principles should apply and that the judge was right to strike out this part of the claim.

Conclusion

50. It is essential that, during the stage of pleadings, the court should resist the temptation to form a view as to the likelihood of success if the action came to trial. It must not go beyond satisfying itself that, if the facts alleged were established, the plaintiff might succeed.

51. We must therefore respectfully disagree with the judge's conclusions, even though these were based on a long and intimate knowledge of the tortuous history of this claim, save with regard to the issue of undue influence.

52. In our judgment, the plaintiff should have leave to serve the Statement of Claim (9th version) with the exception of paragraph 36, any references thereto on the pleadings and Prayer (7), which should all be struck out.

53. The appeal therefore largely succeeds.

Costs

54. In considering the question of costs, we take into account the chequered history of the pleadings and the manner in which the plaintiff has changed his grounds or expanded or amended them.

55. Obviously a plaintiff ought not to be punished for the vagaries of his legal advisers if, in the end, he has placed triable issues before the court. But this must not be allowed to bear unreasonably upon the defendant, nor impose upon him costs which he would not have incurred if the plaintiff's case had been pleaded much earlier in the manner in which it now stands.

56. The judge ordered that the costs of the proceedings before him in January and February should be paid by the plaintiff.

57. The history of this matter persuades us that we should not disturb that order, even though the plaintiff has largely succeeded in the appeal.

58. The costs of the appeal shall be plaintiff's costs in the cause.

59. Statement of Claim to be served within 7 days. Defence to be served within 10 weeks thereafter.

Representation:

Mr. D. Rattee, Q. C. with Mr. J. Lam (S. K. Wong & Co.) for Plaintiff/Appellant

Sir Patrick Neill, Q. C. with Mr. R. Wong (T. S. Tong & Co.) for D.1/R.1

Miss C. Bridges (Demon, Hall & Burgin) for D.2/R.2.