Case Detail

HCA1299/2004

& HCA1092/2006

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

ACTION NOS. 1299 OF 2004 AND 1092 OF 2006

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

BETWEEN
	KEEN LLOYD ENERGY LIMITED	Plaintiff
	(formerly known as KEEN LLOYD INVESTMENTS LIMITED
	and further formerly known as KEEN LLOYD LIMITED)
	and
	BANK OF CHINA (HONG KONG) LIMITED	Defendant
	(formerly known as SIN HUA BANK LIMITED, HONG KONG BRANCH)

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

(HEARD TOGETHER)

Before : Hon Poon J in Chambers

Date of Hearing : 30 April 2008

Date of Decision on Costs : 7 May 2008

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D E C I S I O N O N C O S T S

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A. Introduction

1. This Decision should be read together with the Decision that I handed down on 11 January 2008.

2. In the earlier Decision, I allowed the Bank’s striking out application on Ground 1 (issues estoppel) and on Ground 3 (Energy’s abuse of process by re-litigating causes of action caught by the issues estoppel). I also made an order nisi that the Bank shall have the costs including all costs reserved, to be taxed if not agreed.

3. Both the Bank and Energy now apply to vary the costs order nisi. The Bank asks that there should be a certificate for two counsel. Energy contends that it should have :

(a) the costs of and occasioned by the adjournment of the hearing scheduled for 14 and 15 February 2007 (“the Costs of the Adjournment”) with a certificate for two counsel; and

(b) two-third of the costs of and occasioned by the Bank’s striking out application with a certificate for two counsel.

B. The Bank’s application

4. The Bank’s application is not opposed.

5. In my view, it is plainly an appropriate case to grant a certificate for two counsel. The issues involved, both legal and factual, are complicated. The allegations raised by Energy against the Bank are all very serious. The claims are substantial indeed. And both sides had instructed leading counsel.

6. I will therefore allow the Bank’s application.

C. Energy’s application

C.1. The Costs of the Adjournment

7. I first look at the Costs of the Adjournment. Those costs, having been reserved, are now awarded to the Bank pursuant the costs order nisi.

8. The hearing of the striking out application was fixed to be heard on 14 February 2007 with two days reserved. Mr Yuen, SC, for Energy, applied for an adjournment on the grounds that the arguments raised by Mr Chow, SC, for the Bank, went considerably beyond the broad grounds stated in the letter of the Bank’s solicitors dated 11 August 2006; that there were new factual accusations raised against Energy and Mr Chin; and that Energy was deprived of an opportunity to file evidence in answer thereto. The application was opposed. After hearing arguments, I allowed it and gave directions for filing of evidence. Costs were reserved because I wanted to know what new evidence Energy would file before making a final determination.

9. Having looked at the further evidence filed by Energy again, I agree with Mr Chow that they contained substantially the same allegations Mr Chin had raised before. The main purpose of the further evidence was effectively to beef up Energy’s case. In the circumstances, I do not think it now lies in Energy’s mouth to argue that the adjournment was occasioned by the need to file further evidence to meet the so-called new factual allegations.

10. Mr Yuen took a further point, which is this. He said the adjournment was necessary for Energy to consider the matter further. It was undoubtedly another reason for the adjournment. But if it was Energy who wanted and was granted the indulgence, it should of course bear the costs.

11. For the above reasons, Energy’s application for the Costs of the Adjournment fails.

C.2. The costs of the striking out application

12. I come now to the costs of the striking out application.

13. The applicable principles are well settled. They may be summarized as follows :

(1) costs are in the discretion of the court;

(2) they should follow the event, except where it appears to the court that in the circumstances of the case some other order should be made;

(3) the general rule does not cease to apply simply because the successful party raises issues or makes allegations on which he fails, but where that has caused a significant increase in the length or costs of the proceedings he may be deprived of the whole or part of his costs; and

(4) where the successful party raises issues or makes allegations “improperly or unnecessarily”, the court may not only deprive him of his costs but may order him to pay the whole or a part of the unsuccessful party’s costs.

See In re Elgindata Ltd (No. 2) [1992] 1 WLR 1207 per Nourse LJ at 1214A-C applied by the Court of Appeal in Wang Din Shin v. Nina Kung, CACV67/2003, unreported, 19 April 2005, per Yuen JA at paragraph 39.

14. The “costs to follow the event” principle is the starting point. And the burden rests with the losing party to show that there is good reason to depart from it : Hong Kong Kam Lan Koon Ltd v. RealrayInvestment Ltd (No. 4) [2005] 4 HKC 162, per Lam J at paragraph 14 at p. 166I.

15. Mr Yuen first relied on principle (4) and submitted that on its application, the courts now apply a more flexible approach and do not require the losing party to show that the successful party had raised the issues or allegations improperly or unnecessarily. He derived support from two recent English authorities (see below) and Thomas Vincent v. South China Morning Post Publishers Ltd (No. 2) [2004] 3 HKLRD 471.

16. In Phonographic Performance Limited v. AIE Rediffusion Music Ltd [1999] 1 WLR 1507, Lord Woolf said at 1522H :

“From 29 April 1999 the ‘follow the event’ principle will still play a significant role, but it will be a starting point form which a court can readily depart. This is also the position prior to the new rules coming into force. The most significant change of emphasis of the new rules are reflecting a change of practice which has already started. It is now clear that a too robust application of the ‘follow the event’ principle encourages litigants to increase the costs of litigation, since it discourages litigants from being selective as to the points they take. If you recover all your costs as long as you win, you are encouraged to leave no stone unturned in your effort to do so.”

And at 1523H :

“The ‘well-established practice’ on which Nourse LJ based his third principle is, as I have already indicated, less generally followed than it has been in the past and it is no longer necessary for a party to have acted unreasonably or improperly to be deprived of his costs of a particular issue on which he has failed.”

Lord Woolf then went on to say that where the successful party raised issues on which fails, he may not only be deprived of his costs but may also be ordered to pay the other party’s costs, even though those issues may not have been raised improperly or unreasonably.

17. Lord Woolf’s approach was followed by Longmore LJ in Summit Property Ltd v. Pitmans (a firm), [2001] EWCA Civ. 2020, at paragraph 16.

18. In the SCMP case, Yuen JA also cited Lord Woolf’s judgment and said :

“16. In circumstances where there were discrete claims for different sums and the time spent on the failed claims could be differentiated from that spent on successful claims, I think the traditional practice of simply ordering costs to ‘follow the event’, however much time may have been wasted on the failed claims, should give way to a fairer, more precise approach that would reflect the realities of litigation.”

19. For my part, I think what Lord Woolf had advocated in extending the application of principle (4) is a merited approach. But I do not think it is as yet permissible under the Rules of the High Court. For under Order 62, rule 7(1), it is only where a successful party raises issues or makes allegations improperly or unnecessarily that he may be ordered to pay a part of the other party’s costs.

20. In fact, Yuen JA recognized this statutory restriction in the Nina Wang case, where she said in paragraph 40 thus :

“The judge had expressly stated his reliance on these principles. These principles were discussed by Lord Woolf M.R. in AEI Rediffusion Music Ltd v Phonographic Performance Ltd [1999] 1 WLR 1507, a judgment delivered before the Civil Procedure Rules took effect. Lord Woolf stated that the position (even prior to the new Rules coming into effect) was that the courts have become more ready to depart from the ‘follow the event principle’ as too robust an application of that principle encourages litigants to increase the costs of litigation, since it discourages litigants from being selective as to the points they take. However, I fear I may have overstated the extent of Lord Woolf’s preparedness to depart from the Elgindata principles when in Thomas Vincent v South China Morning Post Publishers Ltd (No. 2) [2004] 3 HKLRD 471, I suggested that where the successful party raises issues on which he fails, he may not only be deprived of his costs but may also be ordered to pay the other party’s costs, even though those issues may not have been raised improperly or unreasonably (§15). Under Order 62 rule 7(1) RHC, it is only where a successful party raises issues or makes allegations improperly or unnecessarily that he may be ordered to pay a part of the other party’s costs.”

21. For the above reasons, I am unable to accept Mr Yuen’s submission that for principle (4), the losing party needs not show that the successful party has raised issues or made allegations improperly or unnecessarily.

22. Applying principle (4), I am of the view that the Bank had not been acting unreasonably or unnecessarily in raising Grounds 2 and 3 in the striking out application. The Bank cannot be ordered to pay Energy the costs associated with them.

23. Mr Yuen next relied on principle (3) and argued that the Bank should be deprived of the costs in connection with Ground 2 and Ground 3.

24. In my view, in raising Ground 2 and the matters that I mentioned in paragraph 52 of the earlier Decision in support of Ground 3, the Bank had indeed significantly increased the preparation and the length of the hearing. It is fair to deprive the Bank of the related costs. Taking the matter in the round, I think 50% is appropriate.

D. Conclusion

25. For the above reasons, I will vary the costs order nisi to the effect that the Bank shall have :

(a) the Costs of the Adjournment; and

(b) 50% of the costs of the striking out application, including all costs reserved

with a certificate for two counsel.

26. On the costs of the present applications, my view is as follows. The Bank should have the costs of its application and the costs of Energy’s failed application for the Costs of the Adjournment. On Energy’s failed application for the costs of the striking out application, I agree with Mr Chow that the Bank, having won that application substantially, is entitled to costs.

27. Accordingly, I will order that the Bank shall have the costs of its and Energy’s applications for variation of the costs order nisi, to be taxed if not agreed, with a certificate for two counsel.

(J. Poon)
Judge of the Court of First Instance
High Court

Mr Rimsky Yuen, SC leading Ms Mona Chhoa, instructed by

Messrs Waller Ma Huang & Yeung, for the Plaintiff

Mr Anderson Chow, SC leading Ms Eva Sit, instructed by Messrs Deacons, for the Defendant

HCA1299/2004
& HCA1092/2006

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

ACTION NOS. 1299 OF 2004 AND 1092 OF 2006

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

BETWEEN

	KEEN LLOYD ENERGY LIMITED	Plaintiff
	(formerly known as KEEN LLOYD INVESTMENTS LIMITED and further formerly known as KEEN LLOYD LIMITED)
	and
	BANK OF CHINA (HONG KONG) LIMITED	Defendant
	(formerly known as SIN HUA BANK LIMITED, HONG KONG BRANCH)

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

(HEARD TOGETHER)

Before : Hon Poon J in Chambers

Dates of Hearing : 14 February and 17–19 July 2007

Date of Further Hearing : 4 January 2008

Date of Decision : 11 January 2008

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D E C I S I O N

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A. THE APPLICATIONS

1. The Bank of China Limited (“BOC”) applied to strike out the statements of claims of Keen Lloyd Energy Limited (“Energy”) in both HCA1299/2004 and HCA1092/2006 (“the 2004 Action” and “the 2006 Action”) because the claims :

(1) are obviously unsustainable by reason of :
(a) issue estoppel arising from the decision of Deputy Judge L. Chan in the 2004 Action dated 12 April 2006 (“the Decision”);
(b) time-barred in respect of the 2006 Action;
(c) the statements of claim disclosing no reasonable cause of action (“Ground 1(a), (b) and (c)” respectively);
(2) are inconsistent and bound to fail (“Ground 2”); and
(3) amount to an abuse of process (“Ground 3”).

2. After the hearing of BOC’s application in July 2007 and before the handing down of this Decision, Energy applied for leave to adduce further evidence, namely two letters between Sin Hua Bank Ltd (“SHB”), BOC’s predecessor, and Hong Kong Monetary Authority dated 18 May 1998 and 17 July 1998. On 4 January 2008, I dismissed Energy’s application with oral reasons given.

3. The background leading to BOC’s application for striking out may be summarised as follows.

B. BACKGROUND

4. Energy is a company in the Keen Lloyd Group of companies. The holding company was Keen Lloyd Resources Ltd, formerly known as Keen Lloyd Investments Ltd and Keen Lloyd Ltd (“Resources”). The other subsidiary of the Group that featured is Keen Lloyd Motors Ltd (“Motor”). At all material times, the Group was controlled by the majority shareholder, Mr Chin Kam Chiu (“Mr Chin”).

5. The Group had banking relationship with SHB. At the material times, SHB maintained two branches, one in Hong Kong (“the Hong Kong Branch”), the other in Shenzhen (“the Shenzhen Branch”). SHB’s then general manager was a Mr Wu Jun Sheng (“Mr Wu”).

6. The Group had general banking facilities with SHB for : (a) HK$1.656 billion to HK$1.827 billion between July 1997 and February 1998 and (b) HK$1.75 billion between April and September 1998. The facilities were secured by, among other things, pledges over realty owned by various companies in the Group.

7. Since 2000, defaults occurred upon which SHB began to taken actions to recover the outstanding debts. Litigations ensued. Eventually Motor and Resources were wound up.

8. On 24 March 2004, Mr Chin was, together with four officers of SHB, convicted of conspiracy to defraud SHB in HCCC158/2003 for having dishonestly applied for and negotiated 25 letters of credit between 19 November 1998 and 16 April 1999 when there was no underlying commercial transaction behind them. By November 1998, the Group owed huge sums of money to SHB, mainly in respect of overdue T/R, and the Hong Kong Branch had exercised its rights to retain the Group’s goods. The conspiracy involved the opening of the letters of credit by the Shenzhen Branch based on false underlying documents ostensibly to finance the sale and purchase of goods and apply the funds so generated to secure the release of the detained goods. The conspiracy did not increase the Group’s indebtedness to SHB, save that further bank and interest charges were incurred in respect of the letters of credit. But it did cause SHB to lose its security over the detained goods and in its place obtained no security, as all the letters of credit related to fictitious transactions. Mr Chin’s conviction was later upheld on appeal on 22 July 2005 in CACC179/2004.

9. Shortly after Mr Chin’s conviction, Energy commenced the 2004 Action against BOC on 1 June 2004. The indorsement on the writ (“the Original 2004 Indorsement”) set out a claim of fraudulent misrepresentation and claimed damages of HK$5 billion. On 12 December 2005, Energy applied for leave to amend its claim (“the Amendment Application”). Leave was granted by the Registrar on 21 December 2005. Energy then amended the indorsement (“the 1^st 2004 Amended Indorsement”) and filed a statement of claim (“the Original 2004 SOC”). BOC appealed. By the Decision, the Deputy Judge set aside the 1^st 2004 Amended Writ and the Original 2004 SOC and restored the Original 2004 Indorsement.

10. Pursuant to leave granted by the master on 30 May 2006, Energy amended the writ again and filed a new statement of claim (“the New 2004 SOC”).

11. In the New 2004 SOC, Energy pleaded a reckless, alternatively negligent misrepresentation by Mr Wu orally to Mr Chin between July and December 1997 that the Hong Kong Branch could and would increase the general banking facilities from HK$1,656 million to HK$2,400 million and that such increased facilities could be used by Energy, Motor and Resources for the issue of letters of credit (“the 1^st Misrepresentation”), when SHB could not lawfully or did not have the requisite approval to do so.

12. On 22 May 2006, Energy commenced the 2006 Action by writ endorsed with a statement of claim (“the 2006 SOC”). In the 2006 SOC, Energy pleaded :

(1) A fraudulent, alternatively reckless or negligent, misrepresentation by Mr Wu orally to Mr Chin between early and late 1998 that in return for additional securities, the Hong Kong Branch and the Shenzhen Branch could and would jointly further increase the general banking facilities from HK$2,400 million to HK$3,100 million and that such increased facilities could be used by Energy, Motor and Resources for the issue of letters of credit (“the 2^nd Misrepresentation”), when SHB could not lawfully or did not have the requisite authority approval to do so.
(2) Alternatively, a contract based on the facts giving rise to the 2^nd Misrepresentation (“the Contract”).

13. In sum, Energy raised three causes of action based on : (1) the 1^st Misrepresentation; (2) the 2^nd Misrepresentation; and (3) the Contract.

14. I now turn to BOC’s grounds for striking out and begin with Ground 1(a).

C. GROUND 1(a) — ISSUE ESTOPPEL

15. The main question is whether the Decision has created any issue estoppel thereby precluding Energy to raise any of the causes of action based on the 1^st Misrepresentation, the 2^nd Misrepresentation and the Contract.

16. The general legal principles on issue estoppel are well summarized in Halsbury’s Law of Hong Kong, Vol.11(2), para.170-027 at p.280 :

“ A party is precluded from contending the contrary of any precise point which, having once been distinctly put in issue, has been solemnly and with certainty determined against him. Even if the objects of the first and second actions are different, the finding on a matter which came directly (not collaterally or incidentally) in issue in the first action, provided it is embodied in a judicial decision that is final, is conclusive in a second action between the same parties and their privies. This principle applies whether the point involved in the earlier decision, and as to the which the parties are estopped, is one of fact or one of law, or one of mixed fact and law. The conditions for the application of the doctrine have been stated as being that :
(1) the same question was decided in both proceedings;
(2) the judicial decision said to create the estoppel was final; and
(3) the parties to the judicial decision or their privies were the same persons as the parties to the proceedings in which the estoppel is raised or their privies.”

17. Depending on its nature and substance, a determination in an interlocutory application may be capable of giving rise to an issue estoppel : see Re Chime Corp Ltd (No. 2) [2003] 2 HKLRD 945, para.23 at p.954.

18. However, even when the court has expressly determined the same issue in the earlier proceeding, an issue estoppel will not necessarily result. Only determinations which are necessary to the decision, and fundamental to it, will found an issue estoppel. Other determinations, however positive, cannot : Spencer Bower, Turner and Handley on The Doctrine of Res Judicata, para.201 at p.103. The inquiry is : is the determination such that without it the judgment cannot stand? See Spencer Bower, para.202 at p.105.

19. The inquiry entails a careful reading of the Decision and a closer examination of the pleadings in the 2004 Action then before the Deputy Judge. Three questions arose :

(1) What determinations had the Deputy Judge made in the Decision?
(2) Were those determinations necessary and fundamental to his decision?
(3) Is any of Energy’s current claims based on the 1^st Misrepresentation, the 2^nd Misrepresentation and the Contract caught by the issue estoppel arising from the Decision?

I will discuss them in turn.

C.1. What determinations had the Deputy Judge made?

20. In the Original 2004 Indorsement, Energy advanced a claim against BOC for damages in the sum of HK$5 billion for fraudulently misrepresenting in or about December 1997 to Energy that it could and subsequently had increased the Group’s credit facilities from HK$1.8 billion to HK$2.3 billion, when it could not and in fact did not increase such credit facilities. Thus, the only cause of action stated in the Original 2004 Indorsement was one of misrepresentation. And only one misrepresentation was alleged.

21. Energy then expanded its claims in the 1^st 2004 Amended Indorsement. There, Energy claimed against BOC for (1) damages for the fraudulent and/or reckless/and/or negligent misrepresentation made during the period from around 1997 to around the end of 1998 to Energy that it could, would and subsequently had increased credit facilities (for the same to be used by Energy together with Motors and Resources) from HK$1,656 million to HK$3,080 million, when it could not and in fact did not increase such credit facilities to the amount of HK$3,080 million as represented; and (2) damages for breach of contract in respect of the said increase of credit facilities.

22. Then in the Original 2004 SOC, Energy pleaded two oral misrepresentations by Mr Wu to Mr Chin thus :

(1) A reckless, alternatively negligent, misrepresentation made in around July 1997 to December 1997 that the Hong Kong Branch would increase the general banking facilities from HK$1,656 million to HK$2,400 million and that such increased facilities could be used by Energy together with Motor and Resources for, inter alia, the issue of letters of credit (“the 1^st Misrepresentation in its Original Form”).
(2) A fraudulent, alternatively reckless or negligent, misrepresentation made in around early to late 1998 that the Hong Kong Branch would further increase the general banking facilities to HK$3,080 million and such further increased facilities could be uses by Energy together with Motor and Resources for, inter alia, the issue of letters of credit (“the 2^nd Misrepresentation in its Original Form”).

23. Energy further pleaded a contract came into existence between Energy and the Hong Kong Branch that the general banking facilities would be further increased from HK$2,400 million to HK$3,080 million (“the Contract in its Original Form”).

24. Thus before the Decision, Energy had raised in the pleadings of the 2004 Action three causes of actions based on : (1) the 1^st Misrepresentation in its Original Form; (2) the 2^nd Misrepresentation in its Original Form; and (3) the Contract in its Original Form.

25. When the matter came before the Deputy Judge, BOC appealed against the leave granted by the Registrar for amending the Original 2004 Indorsement and filing of the Original 2004 SOC and applied to strike out the Original 2004 SOC. As noted, the Deputy Judge allowed the appeal and struck out the Original 2004 SOC.

26. On a proper and careful reading of the Decision, the Deputy Judge had plainly determined that :

(1) The limitation period for the cause of action based on the 2^nd Misrepresentation in its Original Form would have expired before 12 December 2005 when the Amendment Application was taken out and Energy had failed to show that BOC had no reasonably arguable defence of limitation to it.
(2) The limitation period for the cause of action based on the Contract in its Original Form would have also expired before 12 December 2005 when the Amendment Application was taken out on 12 December 2005 and Energy had failed to show that BOC had no reasonably arguable defence of limitation to it.
(3) It was plain and obvious that the alleged representations relied upon to ground the 1^st Misrepresentation in its Original Form and 2^nd Misrepresentation in its Original Form were mere promises and did not disclose any reasonable cause of action.

Determinations (1) and (2) were made in connection with BOC’s appeal and Determination (3), BOC’s striking out application.

C.2. Were the Determinations necessary and fundamental?

27. Mr Yuen, SC for Energy argued that the Determinations by the Deputy Judge were not final or necessary to his decision. He essentially took three points.

28. First, Mr Yuen contended that the only issue before the Deputy Judge was very narrow, namely, whether Energy should be allowed to amend the Original 2004 Indorsement and to file the Original 2004 SOC out of time, and in particular, whether the test in Welsh Development Agency v. Redpath Dorman Long Ltd [1994] 1 WLR was satisfied.

29. I disagree. A careful reading of the Decision revealed this. Counsel first debated whether BOC would be prejudiced by the operation of section 35(1) of the Limitation Ordinance if the two new claims, namely the 2^nd Misrepresentation in its Original Form and the Contract in its Original Form, were to be added by the Amendment Application, and if so, whether the test laid down in Welsh Development Agency was satisfied. The Deputy Judge ruled in favour of BOC. But he did not stop there. He went further and after considering counsel’s submissions, made Determinations (1) and (2). And based on those two Determinations, he allowed the appeal.

30. Thus analyzed, Determinations (1) and (2) are plainly necessary and fundamental to his allowing BOC’s appeal. For without those Determinations, his decision to allow the appeal simply could not stand.

31. Mr Yuen next referred to paragraph 27 of the Decision where the Deputy Judge said that having allowed the appeal, it was not necessary for him to deal with the striking out application as the same result had already been achieved by allowing the appeal but he would nevertheless briefly deal with it in order to make plain the merits so as to justify the costs order for the summons. Mr Yuen thus submitted that Determination (3) was not necessary to his decision for striking out.

32. Again, I disagree. The Deputy Judge had gone further than just merely illustrating the merits of the striking out application to justify the costs order when he made Determination (3). He did deal with the striking out application substantively, made Determination (3) and ordered the 2004 SOC be struck out on that basis. In such circumstances, Determination (3) is necessary and fundamental to his decision to strike out. His observation in paragraph 27 alone would not render Determination (3) unnecessary for his decision to strike out.

33. Finally, Mr Yuen referred to the solicitors’ exchange of correspondence after the handing down of the Decision and argued that no issue estoppel arose. But the correspondence clearly shows that the solicitors were then discussing about the effect of paragraph 30 of the Decision. There, the Deputy Judge accepted BOC’s submission that the implied terms as pleaded could not be implied to the Contract in its Original Form as it was not necessary to have them for the sake of business efficacy. BOC indicated in the letter dated 28 April 2004 that it was prepared not to rely on it as an issue estoppel, and nothing more. I fail to see how the correspondence can possibly assist Energy on the matters relating to issue estoppel now before me.

34. For the above reasons, I rule that Determinations (1) to (3) do give rise to issues estoppel, precluding Energy from raising them again in either the 2004 or 2006 Action.

C.3. Are Energy’s current claims caught by the issues estoppel?

35. This brings me to examine if Energy’s current claims based on the 1^st Misrepresentation as pleaded in the New 2004 SOC, and the 2^nd Misrepresentation and the Contract as pleaded in the 2006 SOC are caught by the issues estoppel.

36. The 1^st and 2^nd Misrepresentations are each virtually identical to their Original Forms. In the 1^st Misrepresentation, “would and could” is there to replace “would” in its Original Form. In the 2^nd Misrepresentation, “in return for additional securities” and “could and would” are added. Mr Chow, SC for BOC submitted that those slight differences are introduced to meet the various objections raised in the Decision. But they remain the same misrepresentations in substance as their Original Forms. So is the case for the Contract. I entirely agree.

37. In my view, the 1^st Misrepresentation, the 2^nd Misrepresentation and the Contract are all caught by the issues estoppel created by the Decision. Energy is debarred from raising them again in the New 2004 SOC and the 2006 SOC. For this reason alone, the New 2004 SOC and the 2006 SOC must be struck out.

D. OTHER GROUNDS

38. Having reached the above conclusion, it is not necessary for me to deal with other grounds relied on by BOC. For completeness, I will very briefly state my views on them as follows.

D.1. Ground 1(b)

39. On Ground (1)(b), I fully agree with Mr Chow’s submissions that the claims in the 2006 Action are all time-barred.

40. For the claim based on the Contract, the limitation period is six years from the date on which the cause of action accrued : section 4(1)(a) of the Limitation Ordinance, Cap. 347. And for an action in contract, the cause of action generally accrues as soon as there is a breach.

41. Energy pleaded that the Contract was made in 1998 and that SHB, among other things, had never procured or provided for the use of Energy increased general banking facilities to the level of HK$3.1 billion. Energy had however not pleaded expressly the time when the increased facilities should have been procured or provided. That being the case, they should be made available within a reasonable time of the making of the Contract. Mr Chow contended that in the circumstances, it cannot be seriously suggested that under the Contract, the time for SHB to procure or provide the increased facilities had not yet arrived before 22 May 2000, nearly 1½ years after the date of the Contract. Thus the breach would have occurred more than six years before the date of the writ in the 2006 Action. The cause of action based on the Contract is plainly time-barred. I agree.

42. On the claims based on the 2^nd Misrepresentation, the starting point is that the relevant limitation period is six years from the date on which the cause of action first accrued : section 4(1)(a) of the Limitation Ordinance. Energy pleaded that the 2^nd Misrepresentation was made between early to late 1998. It is said to be a negligent, fraudulent or reckless misrepresentation.

43. In the case of the negligent misrepresentation, the cause of action accrues when damage occurs. And damage must have occurred when SHB failed to provide the increased facilities, which was well before 22 May 2000. It is thus time-barred.

44. In the case of the fraudulent misrepresentation, the limitation period does not begin to run until the plaintiff has discovered the fraud or could with reasonable diligence have discovered it : section 26(1) of the Limitation Ordinance. I agree with Mr Chow that the fraud should or could with reasonable diligence have been discovered soon after it was made clear that the general banking facilities never reached the level as allegedly promised by Mr Wu to Mr Chin. Energy relied on section 26(1)(b) of the Limitation Ordinance by alleging that there was concealment on the part of SHB. But as rightly submitted by Mr Chow, no fact has been pleaded in support of the allegation that SHB had deliberately concealed any fact relevant to Energy’s right of action based on the fraudulent misrepresentation. Energy can derive no support by relying on the alleged deliberate concealment. The claim based on fraudulent misrepresentation is clearly time-barred.

45. Finally, I agree with Mr Chow that the case of the reckless misrepresentation does not require separate consideration because it would be covered by the limitation periods to either negligent or fraudulent misrepresentation.

46. All time-barred, Energy’s claims must be struck out.

D.2. Ground 1(c)

47. On Ground 1(c), Mr Chow in essence submitted that both the New 2004 SOC because the misrepresentations pleaded in the New 2004 SOC are not statements of fact. There is no proper basis for the implied representations pleaded in paragraph 5 of the New 2004 SOC. There is no actionable loss. In any event the plea of loss and damage is wholly inadequate and unparticularised. And Energy’s plea for a spilt trial is not an answer to the lack of particulars of loss. I fully agree with Mr Chow’s submissions.

48. Mr Chow advanced similar attacks to the 2006 SOC : the misrepresentations pleaded are not statements of fact; there is no proper basis for the implied representations pleaded in paragraphs 6 and 9(2) of the 2006 SOC; and there is no actionable loss, and in any event the plea of loss and damage is wholly inadequate and unparticularised. I also agree with his submissions entirely.

49. For those reasons, both the 2004 New SOC and 2006 SOC must be struck out.

D.3. Ground 2

50. On Ground 2, Mr Chow contended that the contemporaneous evidence, the evidence and findings in HCCC158/2003, and the defence raised in HCA926, 928 and 929/2004 (“the Receivers Actions”), commenced by the receivers of various properties under three legal charges made by Energy in favour of SHB against the tenants showed that Mr Chin knew SHB was unable to grant the Group additional banking facilities sought. Hence Energy was not affected by the alleged misrepresentations and there could be no reliance. In order to make good his contention, Mr Chow in effect asked me to embark on a very detailed examination of the affidavit evidence. This is verging on a mini-trial on affidavit. I do not think such an approach is called for in a striking out application. This ground fails.

D.4. Ground 3

51. On Ground 3, it is my view that Energy has abused the court’s process by re-litigating causes of action caught by the issues estoppel created by the Decision. That is sufficient for present purposes.

52. However, Mr Chow went further to contend that the 2004 and 2006 Actions amount to an abuse of process in that :

(1) the issue of the 1^st Misrepresentation has already been adjudicated by Chu J in the Receivers Action;
(2) the 2^nd Misrepresentation could and should have been raised in the Receivers Action; and
(3) the 2^nd Misrepresentation amounts to an abusive collateral challenge to the judgment in the criminal proceedings against Mr Chin.

53. For present purposes, I do not think I need to dwell on these matters. Suffice it to say that having considered Mr Chow’s submissions, I have reservation if BOC can rely on those matters to ground a complaint of abuse of process on the part of Energy in the 2004 and 2006 Action.

E. ORDER

54. I would order that the New 2004 SOC and the 2006 SOC be struck out and dismiss both the 2004 Action and the 2006 Action. I also make an order nisi that costs be to BOC, including all costs reserved, to be taxed if not agreed.

(J. Poon)
Judge of the Court of First Instance
High Court

Mr Rimsky Yuen, S.C. leading Ms Mona Chhoa, instructed by Messrs Waller Ma Huang & Yeung, for the Plaintiff

Mr Anderson Chow, S.C. leading Ms Eva Sit,instructed by Messrs Deacons, for the Defendant

HCA1299/2004 & HCA1092/2006

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

ACTION NOS. 1299 OF 2004 AND 1092 OF 2006

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

BETWEEN
	KEEN LLOYD ENERGY LIMITED (formerly known as KEEN LLOYD INVESTMENTS LIMITED and further formerly known as KEEN LLOYD LIMITED)	Plaintiff
	and
	BANK OF CHINA (HONG KONG) LIMITED (formerly known as SIN HUA BANK LIMITED, HONG KONG BRANCH)	Defendant

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

(HEARD TOGETHER)

Before : Hon Poon J in Chambers

Date of Hearing : 4 January 2008

Date of Decision : 4 January 2008

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

D E C I S I O N

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

1. These are the applications by Keen Lloyd to adduce further evidence for the purpose of the striking-out application. The evidence consists of two letters exchanged between Sin Hua Bank and HKMA in May and July 1998.

2. I would like to dispose of two technical points raised by Mr Chow, SC for the Bank, first. That is, delay and non-compliance of my directions regarding the timing for taking out these applications.

3. I accept that there is no delay on the part of Keen Lloyd in taking out this application because they only came to know of the letters when they were served with an affirmation made on behalf of HKMA on 23 October 2007 in another action; that is, HCA1949/2007. They then took steps with a view to adducing the two letters for the purpose of the striking-out application.

4. As to the complaint of non-compliance of my direction, I note that the applications were made within time. In any event, if there is any non-compliance, such non-compliance would be mere technical breach, which is not significant at all.

5. Turning to the substance of the applications, there is a difference in counsel’s approach to these applications. Mr Chow, for the Bank, relies on the English decision in Secretary of State for Trade and Industry v. Pauling[2005] 2 PCLC 667, where the English Court of Appeal said that :

“The principle applicable to an application to admit fresh evidence after hearing but before judgment is handed down is no more instructive than would be applied by the Court of Appeal on appeal from a judge.”

6. Mr Yuen, SC for Keen Lloyd, contends that the proper test is whether or not the interests of justice are better served by allowing or rejecting the application. In that connection, he relies on a number of authorities in Australia.

7. For the purpose of today’s hearing, I do not think I need to decide or come to a definite view as to which approach is correct, because both counsel agree that the main factor in considering these applications is whether the letters are relevant to the striking-out application and whether they would have an impact on the outcome of the striking-out application.

8. This brings me to examine the relevance of the two letters and the possible impact that they may have on the result of the striking-out application. I am grateful to counsel for their written and oral submissions regarding the reasons why the two letters are relevant or not. I shall not repeat what they have said here. Suffice to say that I have fully considered their submissions, both written and oral.

9. The crux of Mr Yuen’s contention is that the two letters tend to contradict the Bank’s case and that Mr Chin had knowledge of the bank’s difficulties in granting or increasing the interbanking facilities at the material times.

10. However, I agree with Mr Chow that on the proper reading of the two letters, they are not inconsistent with the Bank’s case. The two letters are of minimal relevance only, and, more importantly, even if they were to be admitted, they would not have any significant bearing on the outcome of the striking-out application at all.

11. For these reasons, the applications are refused.

[Discussion re costs]

12. Costs of the applications be to the Bank in any event, with certificate for two counsel, to be taxed if not agreed.

(J. Poon)
Judge of the Court of First Instance
High Court

Mr Rimsky Yuen, SC leading Ms Mona Chhoa, instructed by Messrs Waller Ma Huang & Yeung, for the Plaintiff

Mr Anderson Chow, SC leading Ms Eva Sit, instructed by Messrs Deacons, for the Defendant

Appeals by the Plaintiff to Court of Appeal dismissed with costs. Please refer to CACV34, 35, 36, 37/2008 dated 23 September 2008

HCA 1299/2004

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

ACTION NO. 1299 OF 2004

______________________

BETWEEN

	KEE LLOYD ENERGY LIMITED (formerly known as Keen Lloyd Investments Limited and further formerly known as Keen Lloyd Limited)	Plaintiff
	and
	BANK OF CHINA (HONG KONG) LIMITED (formerly known as Sin Hua Bank Limited, Hong Kong Branch)	Defendant

______________________

Before : Deputy High Court Judge L. Chan in Chambers

Date of Hearing : 13 March 2006

Date of Handing Down of Decision : 12 April 2006

______________________

D E C I S I O N

______________________

1. The Registrar on 21 December 2005 granted leave to the Plaintiff to amend its Indorsement of Claim and to file and serve the Statement of Claim within seven days thereafter. The Plaintiff duly amended the Indorsement of Claim and filed the Statement of Claim on the same day. The Defendant on the same day filed a notice of appeal against the Order of Registrar. In addition, the Plaintiff also issued a summons to strike out the Amended Writ of Summons endorsed with the Amended Indorsement of Claim and the Statement of Claim on the ground that they disclose no reasonable cause of action.

Background

2. The Plaintiff issued a Write of Summons against the Defendant with an Indorsement of Claim for damages of HK$5 billion for fraudulent misrepresentation made “in or about December 1997 to the Plaintiff, inter alia, that the Defendant could and subsequently had increased the Keen Lloyd Group of Companies (“the Group”) credit facilities with the Defendant from HK$1.8 billion to HK$2.3 billion, when the Defendant could not and did not increase such facilities to the Group”.

3. The Defendant filed an acknowledgement of service on 4 July 2004. The Plaintiff did not file any Statement of Claim. On 6 October 2005, it filed a notice of intention to proceed. On 12 December 2005, it issued a summons to amend the Indorsement of Claim and to file the Statement of Claim. It wanted to amend the Indorsement to say that the misrepresentation, which was made fraudulently, recklessly or negligently during the period from July 1997 to around the end of 1998, was that the Defendant could increase the general banking facilities from HK$1.656 billion to HK$3.080 billion and the facilities could be used by the Plaintiff as well as Keen Lloyd Motors Limited and Keen Lloyd Resources Limited, but the Defendant failed to honour the representation. The amendment also sought damages for breaches of a contract in respect of the said increase of credit facilities. I have already said that the Registrar allowed this summons on 21 December 2005 and the Defendant appealed against that order.

Appeal on the ground of Limitation

4. The Defendant's ground of appeal is based on the law of limitation. It argued that the amendment had brought in new claims that were not statute barred on the day when the writ was first issued but were barred on the day when the summons to amend was issued.

5. Mr Chow, leading counsel for the Defendant, submitted that if the Plaintiff should maintain that the new claims were not barred on the day when the summons was issued, it could issue a new writ for these claims instead of including them in this action by amendment. To make good his submissions that the amendment to the Indorsement had brought in new claims, Mr Chow also referred to the contents of the Statement of Claim.

6. The Amended Indorsement of Claim and the Statement of Claim reveal that the Plaintiff's claim as originally set out in the Indorsement had been changed and expanded from one misrepresentation made in about December 1997 to two misrepresentations. They were allegedly made between July to December 1997 and between early to late 1998 respectively. The 1^st misrepresentation was said to have been made negligently or recklessly. It stated that the general banking facilities would be increased from HK$1.656 billion to HK$2.4 billion. The 2^nd misrepresentation was said to have been made fraudulently, recklessly or negligently. It stated that the general banking facilities would be increased from HK$2.4 billion to HK$3.080 billion. The amendment thus brought in a new claim grounded on the second misrepresentation. It also added an alternative claim for damages for breach of a contract that arose from the 2^nd misrepresentation.

7. Mr Chow further submitted that if new claims are added by way of amendment, section 35(1) of the Limitation Ordinance would deem them to have been commenced on the same date as the original action. If they are not barred on the commencement date of the original action, but are barred on the date when the summons to amend is issued, to include them by amendment after they have been barred would defeat the defendant's defence of limitation because of deeming effect of section 35(1) of the Ordinance. In such case, the defendant would be prejudiced by section 35(1). However, if the new claims are already barred on the commencement date of the original action, section 35(1) would not create such prejudice as the deemed commencement date would still be after the expiry of the limitation period.

8. Thus in cases where the defendant may be prejudiced by section 35(1), it is for the plaintiff should to show that the defendant has no reasonably arguable defence of limitation to the new claims or that the plaintiff can bring the new claims within sections 35(5) and (6) of the Ordinance and O. 20 r. 5(5) of the Rules of the High Court. Mr. Chow further submitted that the Plaintiff has not done so in this case and leave to amendment should not have been given.

9. The relevant parts of section 35 are as follows:

“ (1) For the purposes of this Ordinance, any new claim made in the course of any action shall be deemed to be a separate action and to have been commenced-
(a) …; and
(b) in the case of any other new claim, on the same date as the original action.
(2) In this section a new claim means any claim by way of set-off or counterclaim, and any claim involving either-
(a) the addition or substitution of a new cause of action; or
(b) …,
….
(3) Except as provided by section 30 or by rules of court (which are not relevant here), the court shall not allow a new claim within subsection (1)(b), other than an original set-off or counterclaim, to be made in the course of any action after the expiry of any time limit under this Ordinance which would affect a new action to enforce that claim.
(4) ...
(5) Rules of court may provide for allowing a new claim to which subsection (3) applies to be made as there mentioned, but only if the conditions specified in subsection (6) are satisfied, and subject to any further restrictions the rules may impose.
(6) The conditions referred to in subsection (5) are-
(a) in the case of a claim involving a new cause of action, if the new cause of action arises out of the same facts or substantially the same facts as a cause of action in respect of which relief has already been claimed in the action by the party applying for leave to make the amendment; and
(b) ...”

10. The relevant parts of Order 20 rule 5 also provide as follows:

“ (1) Subject to Order 15, rules 6, 7 and 8 and the following provisions of this rule, the Court may at any stage of the proceedings allow the plaintiff to amend his writ, or any party to amend his pleadings, on such terms as to costs or otherwise as may be just and in such manner (if any) as it may direct.
(2) Where an application to the Court for leave to make the amendment mentioned in paragraph (3), (4) or (5) is made after any relevant period of limitation current at the date of issue of the writ has expired, the Court may nevertheless grant such leave in the circumstances mentioned in that paragraph if it thinks it just to do so.
(3) ...
(4) ...
(5) An amendment may be allowed under paragraph (2) notwithstanding that the effect of the amendment will be to add or substitute a new cause of action if the new cause of action arises out of the same facts or substantially the same facts as a cause of action in respect of which relief has already been claimed in the action by the party applying for leave to make the amendment.”

11. I am also referred to Welsh Development Agency v Redpath Dorman Long Ltd [1994] 1 WLR 1409 at 1425F-H where the English Court of Appeal said:

“ We now wish to make it clear that, though the test applied in Leicester Wholesale Fruit Market Ltd v Grundy [1988] 1 WLR 107 was the correct test in the circumstances of that case, in which section 35(1) gave the plaintiff no advantage, it was unnecessary for the decision in that case to disagree with what Purchase LJ said in Grimsby Cold Stores Ltd v Jenkins & Potter (1985) 1 Const. LJ 362, 370. Our view is that Judge Hicks was correct in concluding that where section 35(1) does, or may well, give the plaintiff an advantage a different test, namely that enunciated by Purchase LJ in the Grimbsy Cold Stores case, should be applied. In such a case, leave to amend by adding a new claim should not be given unless the plaintiff can show that the defendant does not have a reasonably arguable case on limitation which will be prejudiced by the new claim, or can bring himself within R.S.C., Ord. 20, r. 5.”

Section 35(1) of our Limitation Ordinance is the same as section 35(1) of the Limitation Act of 1980 as discussed in Welsh Development Agency. Our Order 25 rule 5(5) is also the same as the one as discussed in this case.

12. Mr Chow thus submitted that the new claims sought to be added by the amendment herein might not have been barred on the date when the action was commenced but had obviously been barred when the summons to amend was issued. These claims are also outside the scope of sub-sections 35(5) and (6) of the Ordinance and O. 20 r. 5(5) of the Rules of the High Court. He therefore submitted that as the Plaintiff has not shown that the defendant has no reasonably arguable defence of limitation to these new claims, the Registrar should not have granted leave.

13. Mr Yuen, leading counsel for the Plaintiff disagreed. He submitted that the amendment was rightly allowed. The Defendant could plead and argue the limitation defence in respect of any new claim that might have been brought in by the amendment. This defence would be adjudicated at the trial. He did not think that the Defendant would be prejudiced by the deeming effect of section 35(1) of the Ordinance if the new claims were not barred by limitation at the commencement of the action but were so barred when the summons to amend was issued. He submitted that section 35(1) would not operate in such scenario.

14. I regret that I cannot accept Mr. Yuen's submission as it is contrary to the plain meaning of section 35(1). I agree with Mr. Chow's understanding of the effect of section 35(1). I agree that the law has been set out correctly in Welsh Development Agency. I now consider whether the new claims are covered by the objection raised by Mr Chow.

The 2^nd misrepresentation

15. The first misrepresentation as originally pleaded in the Indorsement of Claim was allegedly made in about December 1997 that the general banking facilities would be increased from HK$1.8 billion to HK$2.3 billion. After the amendment, it became a misrepresentation made from around July 1997 to around the end of 1998 that the general banking facilities would be increased from HK$1.656 billion to HK$3.080 billion (mistakenly typed as millions).

16. The Statement of Claim as filed pursuant to the leave granted revealed that there were in fact alleged two misrepresentations made at different times for the general banking facilities to be increased to different levels.

17. Mr Yuen argued that the amendment did not introduce two misrepresentations but that the two misrepresentations in fact constituted part and partial of the same transaction. I do not agree. The misrepresentations as introduced by the Amended Indorsement of Claim and elaborated in the Statement of Claim clearly refer to two distinct causes of action. I refer to them as causes of action without prejudice to whether they should be struck out. They were allegedly made at different times with different contents. They meant to give the Plaintiff different facilities. Indeed the Plaintiff did not plead that the Defendant had failed to provide the facilities as alleged in the 1^st misrepresentation although Mr Yuen said that when the facilities were withdrawn, that resulted in both the first and second representations being false. The 2^nd misrepresentation is thus a new cause of action. It is also not within the scope of sub-sections 35(5) and (6) of the Ordinance or O. 20 r. 5.

18. Regarding the limitation for this cause of action, section 4(1)(a) of the Limitation Ordinance provided a limitation period for negligent misrepresentation of six years from the accrual of the cause of action. The cause of action would have accrued when damages accrued (see para. 5.002 of Limitation Periods by A McGee, 4^th edition).

19. The 2^nd misrepresentation was made between early to late 1998. The Plaintiff would have suffered the loss when the Defendant failed to provide the increased general banking facilities at HK$3.080 billion. That failure should have come about soon after the making of this misrepresentation. The limitation period of six years would thus have expired before 12 December 2005. If this claim was made on 1 June 2004 when the writ of summons was first issued, it might not have been barred as six years before this day would be 1June 1998 when the representation might not have been made.

20. If the misrepresentation was a fraudulent one, section 26(1) provides that the period of limitation shall not begin to run until the Plaintiff has discovered the fraud or would have discovered it with reasonable diligence. The nature of the 2^nd misrepresentation, if of fraud, should have been discovered soon after it was made as the facilities never reached the ceiling as allegedly promised. The limitation period should thus have expired before 12 December 2005. I think the 6 year limitation period should apply in case the misrepresentation was a reckless one.

21. If the Plaintiff would like to introduce this new claim of misrepresentation by amendment, it should show that the Defendant on the date of summons had no reasonably arguable defence of limitation to it. The Plaintiff has not done so before the Registrar or on appeal. I agree that it should not be granted leave to introduce this new claim.

The Contract

22. The contract as pleaded was made in early to late 1998. If arose out of the 2^nd misrepresentation. It required the Defendant to increase the general banking facilities from HK$2.4 billion to HK$3.080 billion. The alleged breach was the Defendant's failure to provide the HK$3.080 billion facilities. I hold that it is a new cause of action not within sub-sections 35(5) and (6) or O. 20 r. 5. There was no pleading as to when the increased facilities should be available. The law would imply a reasonable time after the contract was made. The reasonable time could not be as long as 12 months and it should also have expired before 12 December 1999.

23. The limitation for contract is six years from the date of accrual of the action. That is generally the date of breach. In this case, it was the expiry of the reasonable time. The limitation period has thus expired six years from the lapse of the reasonable time and it would have expired before 12 December 2005 when the summons was issued.

24. If this claim was made on 1 June 2004 when the writ was first issued, it might not have been barred as six years before this day would be 1June 1998 when the representation might not have been made or the reasonable time not yet expired.

25. In these circumstances, it was again necessary for the Plaintiff to show that the Defendant had no reasonably arguable defence of limitation to the breach of contract claim as at 12 December 2005 before this claim could be introduced by the summons to amend. The Plaintiff had not done so and leave should not have been granted for this claim to come in by amendment.

26. I therefore set aside the leave granted to the Plaintiff to amend the Indorsement of Claim and to serve the Statement of Claim. I also order the costs of the appeal and below be paid by the Plaintiff to the Defendant.

Striking out

27. Having allowed the appeal, it is not necessary for me to deal with the summons to strike out as the same result has already been achieved by allowing the appeal. However, I would briefly deal with it in order to made plain the merits so as to justify the costs order for this summons.

28. Mr Chow argued that the alleged representations were not really representations but were promises and there was no remedy for a breach of a promise. Mr Yuen counter argued that the representations were not promises as they contained implied warranties or implied representations that the Defendant could lawfully do what it had represented. If, by implied representations, Mr Yuen was referring to what one may comprehend by reading between the lines, then I do not think I can reach the same understanding as he did. I also do not think the criteria in the case of BP Refinery (Westernport) Pty Ltd v President and Councillors and Ratepayers of Shire of Hastings (1978) 52 ALJR 20 for implied terms would be applicable here. I therefore agree that it is plain and obvious that these so-called representations, which were mere promises, do not disclose any reasonable cause of action and should be struck out.

29. On the contract, Mr Chow argued that there is no plea of offer and acceptance or what was the agreed consideration in support of the contract. Mr Yuen replied that the consideration was the Plaintiff's retention of the Defendant as the main banker and the charging of properties and assets by debenture and otherwise by the Plaintiff in favour of the Defendant as security for the facilities. However, there is no pleading of such and I think the plea about contract should also be stuck out.

30. In addition, the Plaintiff has pleaded certain implied terms to the contract. I agree with Mr Chow that these terms cannot be implied as it was not necessary to have them for the sake of business efficacy (see BP Refinery (Westernport) Pty Ltd).

31. In the premises, I would also strike out the Amended Writ of Summons with be Amended Indorsement of Claim and the Statement of Claim with costs of this summons to the Defendant. The Writ of Summons with the original Indorsement of Claim will be restored.

32. Though the appeal is allowed, I understand that the Defendant has no objection for the particulars of the 1^st misrepresentation in the original Indorsement of Claim to be clarified. I would leave the Plaintiff to effect the clarifications by way of amendment to the original Indorsement.

(L. Chan)
Deputy High Court Judge

Mr Rimsky Yuen SC, instructed by Messrs Waller Ma Huang & Yeung, for the Plaintiff

Mr Anderson Chow SC and Mr Godfrey Lam, instructed by Messrs Deacons, for the Defendant

KEEN LLOYD ENERGY LTD v. BANK OF CHINA (HONG KONG) LTD

Related cases with same parties

Files (4)

(1)	are obviously unsustainable by reason of :
	(a)	issue estoppel arising from the decision of Deputy Judge L. Chan in the 2004 Action dated 12 April 2006 (“the Decision”);
	(b)	time-barred in respect of the 2006 Action;
	(c)	the statements of claim disclosing no reasonable cause of action (“Ground 1(a), (b) and (c)” respectively);
(2)	are inconsistent and bound to fail (“Ground 2”); and
(3)	amount to an abuse of process (“Ground 3”).

“	A party is precluded from contending the contrary of any precise point which, having once been distinctly put in issue, has been solemnly and with certainty determined against him. Even if the objects of the first and second actions are different, the finding on a matter which came directly (not collaterally or incidentally) in issue in the first action, provided it is embodied in a judicial decision that is final, is conclusive in a second action between the same parties and their privies. This principle applies whether the point involved in the earlier decision, and as to the which the parties are estopped, is one of fact or one of law, or one of mixed fact and law. The conditions for the application of the doctrine have been stated as being that :
	(1)	the same question was decided in both proceedings;
	(2)	the judicial decision said to create the estoppel was final; and
	(3)	the parties to the judicial decision or their privies were the same persons as the parties to the proceedings in which the estoppel is raised or their privies.”

(1)	What determinations had the Deputy Judge made in the Decision?
(2)	Were those determinations necessary and fundamental to his decision?
(3)	Is any of Energy’s current claims based on the 1^st Misrepresentation, the 2^nd Misrepresentation and the Contract caught by the issue estoppel arising from the Decision?

(1)	The limitation period for the cause of action based on the 2^nd Misrepresentation in its Original Form would have expired before 12 December 2005 when the Amendment Application was taken out and Energy had failed to show that BOC had no reasonably arguable defence of limitation to it.
(2)	The limitation period for the cause of action based on the Contract in its Original Form would have also expired before 12 December 2005 when the Amendment Application was taken out on 12 December 2005 and Energy had failed to show that BOC had no reasonably arguable defence of limitation to it.
(3)	It was plain and obvious that the alleged representations relied upon to ground the 1^st Misrepresentation in its Original Form and 2^nd Misrepresentation in its Original Form were mere promises and did not disclose any reasonable cause of action.

(1)	the issue of the 1^st Misrepresentation has already been adjudicated by Chu J in the Receivers Action;
(2)	the 2^nd Misrepresentation could and should have been raised in the Receivers Action; and
(3)	the 2^nd Misrepresentation amounts to an abusive collateral challenge to the judgment in the criminal proceedings against Mr Chin.

“	(1)	For the purposes of this Ordinance, any new claim made in the course of any action shall be deemed to be a separate action and to have been commenced-
		(a)	…; and
		(b)	in the case of any other new claim, on the same date as the original action.
	(2)	In this section a new claim means any claim by way of set-off or counterclaim, and any claim involving either-
		(a)	the addition or substitution of a new cause of action; or
		(b)	…,
	….
	(3)	Except as provided by section 30 or by rules of court (which are not relevant here), the court shall not allow a new claim within subsection (1)(b), other than an original set-off or counterclaim, to be made in the course of any action after the expiry of any time limit under this Ordinance which would affect a new action to enforce that claim.
	(4)	...
	(5)	Rules of court may provide for allowing a new claim to which subsection (3) applies to be made as there mentioned, but only if the conditions specified in subsection (6) are satisfied, and subject to any further restrictions the rules may impose.
	(6)	The conditions referred to in subsection (5) are-
		(a)	in the case of a claim involving a new cause of action, if the new cause of action arises out of the same facts or substantially the same facts as a cause of action in respect of which relief has already been claimed in the action by the party applying for leave to make the amendment; and
		(b)	...”

“	(1)	Subject to Order 15, rules 6, 7 and 8 and the following provisions of this rule, the Court may at any stage of the proceedings allow the plaintiff to amend his writ, or any party to amend his pleadings, on such terms as to costs or otherwise as may be just and in such manner (if any) as it may direct.
	(2)	Where an application to the Court for leave to make the amendment mentioned in paragraph (3), (4) or (5) is made after any relevant period of limitation current at the date of issue of the writ has expired, the Court may nevertheless grant such leave in the circumstances mentioned in that paragraph if it thinks it just to do so.
	(3)	...
	(4)	...
	(5)	An amendment may be allowed under paragraph (2) notwithstanding that the effect of the amendment will be to add or substitute a new cause of action if the new cause of action arises out of the same facts or substantially the same facts as a cause of action in respect of which relief has already been claimed in the action by the party applying for leave to make the amendment.”