FACV Nos 2, 3, 4 & 5 of 2016

IN THE COURT OF FINAL APPEAL OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION
FINAL APPEAL NOS 2, 3, 4 AND 5 OF 2016 (CIVIL)
(ON APPEAL FROM CACV NOS 34 AND 124 OF 2014)
_____________________
BETWEEN
BEIJING TONG GANG DA SHENG TRADE CO LTD

(as assignee of Greater Beijing Region

Expressways Limited)

Plaintiff
(Respondent)

and
ALLEN & OVERY (a firm)

1st Defendant
(Appellant in
FACV 4 & 5/2016)

NIGEL ALEXANDER CARLISLE AIKEN

2nd Defendant
(Appellant in
FACV 2 & 3/2016)

_____________________
Before :

Chief Justice Ma, Mr Justice Tang PJ,

Mr Justice Chan NPJ, Mr Justice Stock NPJ and
Lord Hoffmann NPJ

Date of Hearing and

Judgment:

24 November 2016

Date of Reasons for

Judgment :

16 December 2016

_____________________________________
R E AS O N S F O R J U D G M E N T
_____________________________________

-2-

Chief Justice Ma:

1.

I agree with the judgments of Mr Justice Tang PJ and Lord

Hoffmann NPJ.
Mr Justice Tang PJ:
Introduction
2.

By a generally endorsed writ issued on 1 September 2011, Greater

Beijing Region Expressways Limited (GBRE), claimed damages against the

1st and 2nd defendants for professional negligence as solicitors and barrister
respectively between 2005 or 2006. By a Deed of Assignment dated 18 January
2012 GBREs causes of action against the defendants were assigned to Beijing
Tong Gang Da Sheng Trade Co Ltd. A notice of the Assignment was given to
the defendants on 16 August 2012. The writ which had not been served was
then amended on 17 August 2012 and Beijing Tong Gang became the plaintiff
(the Plaintiff) in place of GBRE which ceased to be a party. The statement of
claim was served on 14 November 2012.1
3.

In March 2013, both the 1st and 2nd defendants, by separate

summonses, applied to strike out the Plaintiffs claim, essentially on the ground
that the Assignment was champertous and void.

Shortly before the

commencement of the hearing of these summonses, the Plaintiff applied for

leave to add GBRE as a plaintiff (the joinder application) 2. The joinder
application was made on the basis of RHC Order 15 rules 6 and 7, Order 20 rule
5 and under the inherent jurisdiction of the court. 3 Although it was not possible
to state precisely when the limitation periods in respect of the causes of action
covered by the writ had expired, the application was made on the basis that they
1
2

The Deed of Assignment and the notice of assignment were pleaded in para 2.
Although the application was for GBRE to be added as a party, after the striking out of the Plaintiff, it
became effectively, an application to substitute GBRE.
However, at Court of First Instance, in the Court of Appeal and before us, the Plaintiff relied on Order
20 rule 5(1) and (3) only.

-3-

had expired by the date of the joinder application such that if GBRE were to
issue a new writ on that date it would have been met with a successful limitation
defence.
4.

The strike out summonses were heard before Deputy High Court

Judge Le Pichon on 28 January 2014. At the conclusion of the hearing, the

learned Deputy Judge struck out the writ and the statement of claim on the
ground that the Assignment was champertous and void but that the order was
drawn up until after the hearing of the joinder application.
5.

The joinder application was heard on 25 April 2014 and on 12 May

2014, the learned Deputy Judge dismissed the application. Her Ladyship said:
As the limitation period expired in 2011/2012, it is now too late.4

6.

The Plaintiff appealed against the decision to strike out as well as

the dismissal of the joinder application. On 22 May 2015, the Court of Appeal 5
affirmed the decision to strike out the writ and the statement of claim 6 but
allowed the appeal against the dismissal of the joinder application. The Court of
Appeal followed Asia-Pac Infrastructure Development Ltd v Shearman &
Sterling (a firm) [2012] 3 HKLRD 321, and held that since the joinder
application did not involve a new cause of action, no issue of limitation arose
and:
Order 20 rules 5(2) to (5) do not apply and it is not necessary to deal with the
alternative submission of Mr Carolan7 under Order 20 rule 5(3). 8

7.

Against that decision, on 3 February 2016 the Appeal Committee 9

granted leave to the 1st and 2nd defendants to appeal so that this Court could

4
5

6
7
8
9

CFI judgment dated 12 May 2014, para 24.

Cheung CJHC, Lam VP and Kwan JA.
There is no appeal from that concurrent decision.
Counsel for the plaintiff below, who with Mr Charles Sussex SC appeared for the plaintiff before us.
With the concurrence of Cheung CJHC and Lam VP.
Tang PJ, Chan NPJ and Stock NPJ.

-4-

consider whether the issue of limitation was fatal to the joinder application10 and
if so whether, as the Plaintiff contended, we should affirm the decision because
leave should be granted under Order 20 rule 5(3) to permit joinder.
8.

At the conclusion of the hearing, we allowed the defendants

appeals. These are my reasons.

Limitation
9.
Under s 4 of the Limitation Ordinance Cap 347 (the Ordinance),
no actions founded on simple contract or tort may be brought after the
expiration of six years from the date on which the cause of action accrued. It is
not disputed that by the time of the joinder application it was too late for a new
action to be brought against the defendants. However in respect of actions
which had been commenced within time, s 35 of the Ordinance (s 35) 11
permits new claims to be made in a pending action if certain conditions are
satisfied. Section 35(1)(b) provides for relation back such that any new claim
made in the course of any action is deemed to have been commenced on the
same date as the original action. The issues in these appeals are (a) whether the
joinder application involved a new claim which would be caught by limitation;
(b) how section 35 applies, and (c) whether the requirements of Order 20
rule 5(3) are satisfied.
10.

A new claim is defined by s 35(2):

In this section a new claim means any claim involving either
(a)
(b)

11.

the addition or substitution of a new cause of action; or

the addition or substitution of a new party, ...

Section 35(3) states the general position regarding new claims and

limitation:
Except as provided by ... rules of court, the court shall not allow a new
claim ... , to be made in the course of any action after the expiry of any time
10

11

Leave was also granted on the or otherwise basis, but in view of our decision it is unnecessary to deal
with it.
Section 35 of the Ordinance is based on s 35 of the English Limitation Act 1980 (the Act). They are
for practical purposes identical. The numbering of the sub-sections differs from sub-section (5) onwards.

-5limit under this Ordinance which would affect a new action to enforce that
claim.

12.

Mr Victor Dawes SC with Mr James Man who appeared for the

defendants submitted that the addition of GBRE or the substitution of the

plaintiff by GBRE falls plainly within the definition of new claim and the
joinder fell outside Order 20 rule 5(3).
13.

Mr Sussex SC leading Mr Paul Carolan submitted that s 35 did not

apply because the joinder did not involve a new cause of action, that GBRE was
in any event not a new party and if those arguments fail, the joinder which was
in effect an application to correct the name of a party could be permitted under
Order 20 rule 5(3) :
if the Court is satisfied that the mistake sought to be corrected was a
genuine mistake and was not misleading or such as to cause any reasonable
doubt as to the identity of the person intending to sue or, as the case may be,
intended to be sued.

Section 35 of the Ordinance

14.
Mr Sussex relied on the remarks of Millett LJ, as he then was, in
Yorkshire Regional Health Authority v Fairclough Building Ltd [1996] 1 WLR
210 at 218 E-F that the equivalent of s 35(2) of the Ordinance cannot be
construed literally and that:
The first limb must therefore be confined to claims which involve a new cause
of action but which do not involve the addition or substitution of a new party.
Claims which involve the addition or substitution of a new party as well as a
new cause of action fall within the second limb. The question is whether the
second limb also includes claims which involve the addition or substitution of a
new party but which do not involve a new cause of action. In my opinion it
does not.

15.

Relying on such remarks, the plaintiff submitted that the joinder

would not give rise to a new claim within the meaning of s 35 because it did not
involve a new cause of action; accordingly the limitation provisions of s 35 did
not apply and the Court of Appeal was right to grant leave under Order 20
rule 5(1) to permit the joinder. I shall proceed on the assumption that the

-6-

joinder did not involve a new cause of action and take the causes of action as
they appeared on the writ.
16.

Yorkshire Regional Health Authority was concerned with an

application to substitute a plaintiff under Order 15 rule 7.12 The substitution was
necessary because the cause of action13 had become vested in a National Health
Service trust which was established to assume responsibility for the authority. It
was argued on behalf of the defendants in that case that the substitution of
National Health Service trust came within the definition of a new claim under
s 35(2) and should only be allowed if the conditions imposed by s 35 were
satisfied,14 thus, the amendment could not be made after the expiration of the
limitation period unless it was permitted by s 35, or by rules of court.15 It was
further argued that since Order 15 rule 6 and Order 20 rule 5 formed an
exhaustive code governing amendments after the expiration of the limitation
period (and since Order 15 rule 7 was not a part of this code) limitation was
fatal to the application in that case.
17.

It is necessary to look at some other provisions of s 35:

(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) in the case of a claim involving a new party, if the addition or
substitution of the new party is necessary for the determination of the
original action.

12
13
14
15

The English rules are identical to the Hong Kong rules.

For breach of contract against contractors and architects.
217D.
Section 35(3) see para 11 above.

-7(7) The addition or substitution of a new party shall not be regarded for the
purposes of subsection (6)(b) as necessary for the determination of the original
action unless either
(a) the new party is substituted for a party whose name was given in any
claim made in the original action in mistake for the new party's name; or
(b) any claim already made in the original action cannot be maintained
by or against an existing party unless the new party is joined or
substituted as plaintiff or defendant in that action.
(8) Subject to subsection (5), rules of court may provide for allowing a party
to any action to claim relief in a new capacity in respect of a new cause of
action notwithstanding that he had no title to make that claim at the date of
commencement of the action.
(9) Subsection (8) shall not be taken as prejudicing the power of rules of
court to provide for allowing a party to claim relief in a new capacity without
adding or substituting a new cause of action.

18.

A similar submission to that made by the defendants in Yorkshire

Regional Health Authority was rejected by Mance J, as he then was, in The

Choko Star [1996] 1 WLR 774. Mance J said Order 15 rule 7:
deals with the most basic and obvious situation where a person should be
allowed to continue to conduct litigation properly commenced by or against
another.16

19.

Order 15 rule 7 provides:

(1) Where a party to an action dies or becomes bankrupt but the cause of
action survives, the action shall not abate by reason of the death or
bankruptcy.
(2) Where at any stage of the proceedings in any cause or matter the interest
or liability of any party is assigned or transmitted to or devolves upon
some other person, the Court may, if it thinks it necessary in order to
ensure that all matters in dispute in the cause or matter may be effectually
and completely determined and adjudicated upon, order that other person
to be made a party to the cause or matter and the proceedings to be
carried on as if he had been substituted for the first mentioned party.

20.

Mance J said:
Returning to the scheme of the rules of court, I conclude that the type of
situation covered by Ord. 15, r. 7, is one for which the rules would naturally
be expected to cater, and that in this context it should be irrelevant whether or
not the limitation period had expired prior to the assignment, transmission or
devolution in question. All that should matter is that the original litigation was
commenced in time. In my view the wording of Ord. 15, r. 7 is in these

16

783D.

-8respects expressed in precisely the way that one would expect. It is apt to cover
any change necessary as a result of any such assignment, transmission or
devolution at any stage in proceedings. Not only is there no restriction in this
language, read literally. Any restriction by reference to the limitation makes
absolutely no sense and would lead to major absurdities, as in the present and
many other cases which can be envisaged.17
The absence of any reference to limitation in Ord. 15, r. 7, compared with
both Ord. 20, r. 5 and Ord. 15, r. 6, is explained, as I have indicated, by the
different subject matter on which each focuses. Ord. 15, r. 7 deals with a
situation where the proceedings as originally constituted were in perfect order
and subsequent changes require to be catered for: it is self-evident that
limitation must be irrelevant. The other rules focus on situations where the
proceedings as originally constituted were in some way defective or
inadequate, and therefore it might be said that their correction or amendment
worked an injustice in exposing a defendant to some new claim which could
and should have been put forward properly within the limitation period.18

21.

Mance J then concluded that Order 15 rule 7 reflected precisely the

criteria under the equivalent of s 35(6)(b) of the Ordinance that the addition or
substitution of the new party is necessary for the determination of the original
action because:
... (b) any claim already made in the original action cannot be maintained by
or against an existing party unless the new party is joined or substituted as
plaintiff or defendant in that action.19

22.

It is noteworthy that apart from the analysis of the effect of s 35(2)

set out in para 10 above, Millett LJ also approved of this part of Mance Js
judgment:
The substitution of a new party who has succeeded to the interest or liability
of a former party to existing proceedings plainly satisfies the condition
specified in section 35(6)(b) and therefore the condition specified in section
35(5)(b); and this is enough.20

23.

With respect, I agree.

In my view, an application to add or

substitute a party would result in a new claim as defined in s 35(2) and that if
the application is made after the expiration of the limitation period current at the
time of the commencement of the action, in order for the addition or substitution
17
18
19
20

785G.
786B.
787A.
220A

-9-

not to fall foul of limitation, it must come within rules of court as envisaged
under s 35(3) & (5).

Order 15 rule 7 is such a rule, being referable to

s 35(6)(b), and (7)(b). Other rules include Order 15 rules 6(5) and (6), and
Order 20 rule 5.
24.

As for Order 15 rule 6(4) - (6), Mance J said they were clearly

designed to cover under s 35(6) of the Act of 1980, the five situations for which
the Law Reform Committee in its 21st Report [Final Report on Limitation of
Actions (1977) Cmnd. 6923] had recommended that provision should be made.21
25.

Order 15 rule 6 :
(1) No cause or matter shall be defeated by reason of the misjoinder or
nonjoinder of any party; and the Court may in any cause or matter determine
the issues or questions in dispute so far as they affect the rights and interests of
the persons who are parties to the cause or matter.

(5) No person shall be added or substituted as a party after the expiry of any
relevant period of limitation unless either
(a) the relevant period was current at the date when proceedings were
commenced and it is necessary for the determination of the action
that the new party should be added, or substituted, or
(6) The addition or substitution of a new party shall be treated as necessary
for the purposes of paragraph (5)(a) if, and only if, the Court is satisfied that
(a) the new party is a necessary party to the action in that property is
vested in him at law or in equity and the plaintiffs claim in respect
of an equitable interest in that property is liable to be defeated unless
the new party is joined, or
(b) the relevant cause of action is vested in the new party and the
plaintiff jointly but not severally, or
(c) the new party is the Secretary for Justice and the proceedings should
have been brought by relator proceedings in his name, or
(d) the new party is a company in which the plaintiff is a shareholder and
on whose behalf the plaintiff is suing to enforce a right vested in the
company, or
(e) the new party is sued jointly with the defendant and is not also liable
severally with him and failure to join the new party might render the
claim unenforceable.

21

780E.

- 10 -

26.

As for Order 20 rule 5, Mance J noted that Hobhouse J, as he then

was had said :

Ord. 20, r. 522 must now be read with the [1980] Act and as implicitly (but
inelegantly) giving effect to the first alternative, (a), in section 35(6). The
result is that the rule relevant to the present case, Ord. 20, r. 5, must be
construed as being made both under the general power to regulate procedure
and under the more specific power given for the purposes of that Act by section
35 of the Act of 1980.23

27.

Thus, it can be seen how these rules of court Order 15 rules 6 and

7, and Order 20 rule 5 fit into the scheme of s 35. The Plaintiffs submissions,
however, seek to rely on that passage in the judgment of Millett LJ in Yorkshire
Regional Health Authority earlier set out24 for the proposition that only where
the addition or substitution of a new party also involves the addition of a new
cause of action will this constitute a new claim for the purposes of s 35(2)(b) of
the Ordinance and thereby be subject to the bar in s 35(3).
28.

Evans LJ agreed with the judgment of Millett LJ adding some

further observations of his own. The third member of the Court of Appeal, Neill
LJ, agreed with both judgments.
29.

The Choko Star and Yorkshire Regional Health Authority were

referred to by Lord Walker of Gestingthorpe JSC in the Supreme Court in

Roberts v Gill & Co [2011] AC 240. Lord Walker, after stating that he had no
doubt the Court of Appeal in Yorkshire Regional Health Authority was right in
rejecting the argument that Order 15 rule 6 and Order 20 rule 5 formed a
comprehensive code governing amendments after the expiration of the
limitation period, however, added:
I am not sure that I agree with (or indeed understand) the refinements of
Millett LJs reasoning at p 218.25

22
23
24
25

Although as Mance J pointed out Order 20 rule 5 predated the 1980 Act at 781E.
Hobhouse J, Payabi v Armstel Shipping Corporation [1992] 1 QB 907 at p 924.
Para 14 above.
At p 272, para 104.

- 11 -

30.

It may be that this passage is a reference to the reasoning in that

part of Millett LJs judgment relied on by the Plaintiff in the present case and
casts doubt on it. If so, I share this doubt.
31.

However, this reasoning appears to have been adopted in Hong

Kong.

In Asia-Pac, four plaintiffs sued the defendants for professional

negligence. In the course of the proceedings, three of the plaintiffs assigned

their causes of action against the defendants to the 1 st plaintiff. The 1st plaintiff
applied for leave to amend under Order 15 rule 7 which was refused for reasons
which do not concern us. The Court of Appeal allowed his appeal. In his
judgment,26 Cheung CJHC examined the judgments of Mance J in The Choko
Star, Millett LJ and Evans LJ in Yorkshire Regional Health Authority and Lord
Walker in Roberts.27 His Lordship concluded that on these authorities, the
appeal must be allowed.

Cheung CJHC said that in The Choko Star

Mance J:
concluded that the merger and automatic succession by the new company gave
rise to no new cause of action and thus the limitation point was wholly
irrelevant.28

32.

Cheung CJHC then cited the passage from Mance Js judgment

which I have quoted above.29 Mance J proceeded on the basis the substitution of
a new party under Order 15 rule 7 was permitted under Order 15 rule 7 because
Order 15 rule 7 was a rule covered by s 35(5) because it reflected
s 35(6)(b) of the 1980 Act. What Mance J thought distinguished Order 15 rule 7
from Order 15 rule 6 and Order 20 rule 5 was that Order 15 rule 7 was
concerned with proceedings which as originally constituted was in perfect order
and subsequent vicissitudes of life, such as death, bankruptcy or nationalization,
or such like, had to be catered for.

26
27
28
29

With the agreement of Yuen JA and Bharwaney J.

Paras 8-12.
324.
First passage at para 20.

- 12 -

33.

Cheung CJHC then cited the following passages from the

judgments of Millett LJ and Evans LJ. Millett LJ:

Ord 15, r. 7 does not contain, and none of its predecessors ever has contained,
any reference to limitation. This is as it should be, since the circumstances in
which the rule may be invoked do not give rise to any question of limitation.
Even though the rule permits a new party to be substituted for an original party,
this does not involve a new cause of action; the new party is substituted
because he has succeeded to a claim or liability already represented in the
action and sues or is sued in respect of the existing cause of action. The
substitution of the successor does not deprive the defendant of an accrued
limitation defence. There is no good reason why the substitution should not be
made at any stage of the proceedings and whether a relevant period of
limitation has expired or not; the expiry of the limitation period is completely
irrelevant.30

Evans LJ at 221 B/C-E:

When a litigant dies, or becomes bankrupt, the litigation does not

cease, unless the cause of action is personal to him. It may be carried on by his
personal representatives, or his trustee in bankruptcy, in their own names. There
is, not surprisingly, provision in the Rules of the Supreme Court for the change
in the identity of the party to be duly made: R.S.C., Ord. 15, r. 7. A corporate
plaintiff does not die, but it may cease to exist. A particular example is when
the corporation, which is a creature of statute, is terminated by statute and its
rights and liabilities are transferred to some other person. When that occurs, the
new person may become a party to pending proceedings in place of the old.
Although the identity of the party changes, the nature of the claim does
not. It is, in legal terms, the same cause of action as it was before. There is no
question of a new claim or cause of action being asserted, even though in the
particular circumstances the claim is being made by a different person. Because
it is the same cause of action, there is no scope for a limitation defence. The
defendant cannot say that the time for bringing proceedings has expired when
the new claimant replaces the old, because the essential point is that no new
claim is being put forward.

34.

These remarks by Millett LJ and Evans LJ supported the apparent

conclusion that s 35(2) and (3) would, as far as new parties were concerned,
only bite if there was also a new cause of action. This was a conclusion that
underlies the decision of the Court of Appeal and Asia-Pac: see the section of
the judgment headed Assignments did not create new causes of action.
35.

With respect, I do not agree with this view. One starts with the

basics. Section 35(1) covers any new claim as defined in s 35(2). Section
30

215C-E.

- 13 -

35(2)(a) is straight-forward, a new claim is any claim involving the addition or

substitution of a new cause of action. Section 35(2)(b) is also straight-forward:
a new claim is one which involves the addition or substitution of a new party.
But where limitation becomes relevant, s 35(3) states the general position. The
particular situations in which limitation will not be a bar are then set out in
s 35(4) to (12). Section 35(2) should be construed in the context of s 35 as a
whole. Section 35 clearly distinguishes and keeps separate the addition or
substitution of a new cause of action from the addition or substitution of a new
party. For example, s 35(6)(a) in respect of the addition or substitution of a new
cause of action, and s 35(6)(b) and (7)(a) or (b) in the case of the addition or
substitution of a new party.31 A new claim under s 35(2)(b) must satisfy the
conditions of s 35(6)(b) and (7). New claims under s 35(2)(a) have to come
within s 35(6)(a). Moreover, s 35(7)(b) sits uncomfortably with Millett LJs
construction since s 35(7)(b) clearly envisages the maintenance of the claim
already made in the original action. Furthermore, if the result of Millett LJs
construction was intended, s 35(2) could simply define a new claim as one
which involves the addition or substitution of a new cause of action. Section 35
could then go on to provide that a new action has to satisfy s 35(6)(a) unless
where the addition or the substitution of a new party was also involved in which
case the provisions of s 35(6)(b) and s 35(7)(a) or (b) have to be satisfied too.
36.

In Asia-Pac, Cheung CJHC also cited the following passage from

Lord Walker at para 104:

In the ordinary case of a simple assignment or transmission of a cause of
action after proceedings have been commenced, no question of limitation
arises.

37.

With respect, this statement does not throw light on the correct

interpretation of s 35(2). It is correct that in the factual situations covered under

Order 15 rule 7, there is already a pre-existing claim in the action that is sought
31

See also the language of Order 20 rule 5(3) and (5) where the same dichotomy is maintained.

- 14 -

to be assigned, transmitted or to devolve to the new party and that as Mance J

explained Order 15 rule 7 is concerned with situations where the proceedings
as originally constituted were in perfect order.32 Order 15 rule 7 long preceded
the 1980 Act and Mance J concluded there was no reason why why it should
not continue to fulfil the same role for the purposes of the Act of 1980. 33 It is
in this sense only that no question of limitation arises.

34

However, the fact that

Order 15 rule 7 does not involve a new cause of action does not mean that the
limitation bar in s 35 only applies to an amendment to add or substitute a new
party if the amendment also involves a new cause of action. One does not follow
from the other.
38.

It follows that, with respect, I cannot agree with the Court of

Appeal in the present case which purported to follow Asia-Pac, that because no
new cause of action was involved in the joinder application, s 35 did not apply.
Mr Sussex accepted that he could not succeed on this submission unless we
agree with the construction of s 35(2) by the English Court of Appeal in
Yorkshire Regional Health Authority which was adopted in Asia-Pac.
39.

As I have said Mr Sussex accepted that Order 15 rule 7 did not

apply to the joinder application so I now turn to his submission that GBRE was
not a new party or that Order 20 rule 5(3) applies because there was a genuine
mistake.
New Party
40.

Mr Sussex also submitted that s 35 did not apply because GBRE

was not a new party because the writ was originally issued in its name. For this
reason it was said GBRE could not be regarded as a new party. I do not believe
the fact that GBRE was once a party made any difference. As a result of the
amendment on 17 August 2012, GBRE had ceased to be a party. By the joinder
32

786B.
785H.
34
See paras 21-23 above.
33

- 15 -

application it was sought to join GBRE as a party. GBRE was as much a new
party as if the original writ was issued in the Plaintiffs name after the impugned
assignment.
Order 20 rule 5
41.

Lastly, Mr Sussex submitted that leave to amend should be granted

under Order 20 rule 5(3). It is necessary to consider the provisions Order 20

rule 5 in some detail:
(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) An amendment to correct the name of a party may be allowed under
paragraph (2) notwithstanding that it is alleged that the effect of the
amendment will be to substitute a new party if the Court is satisfied that
the mistake sought to be corrected was a genuine mistake and was not
misleading or such as to cause any reasonable doubt as to the identity of
the person intending to sue or, as the case may be, intended to be sued.
(4) An amendment to alter the capacity in which a party sues may be allowed
under paragraph (2) if the new capacity is one which that party had at the
date of the commencement of the proceedings or has since acquired.
(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.

42.

I note first that Order 20 rule 5(1) is subject to the other provisions

of Order 20 rule 5. Order 20 rule 5(2) enables a party to be joined or substituted

by an application made after any relevant period of limitation current at the
date of issue of the writ has expired if it comes within Order 20 rule 5(3) which
in the present case requires that there was a genuine mistake in the name.
Neither rule 5(2) or (3) was concerned with the addition or substitution of a new

- 16 -

cause of action. If a new cause of action was involved that would fall under rule
5(5). Mr Sussex relies on Order 20 rule 5(1) and the Court of Appeal granted
leave under Order 20 rule 5(1) because it was of the view that no question of
limitation was involved because the cause of action remained the same. But,
whether Order 20 rule 5(3) is triggered depended on whether the application
was made after any relevant period of limitation current at the date of issue of
the writ had expired and not whether a new cause of action was involved. It is
not disputed that, here, the application was made after the relevant period of
action current at the date of the writ had expired.
43.

That being so, in my view, the Plaintiff has to show that the

mistake sought to be corrected was a genuine mistake. It is not suggested that

the defendants had been misled in any way so we are not concerned with the
other requirements of Order 20 rule 5(3). The authorities are clear, the mistake
has to be a mistake as to the name rather than the identity of the party or as to
legal rights. Indeed, s 35(7)(a) says so expressly:
the new party is substituted for a party whose name was given in any claim
made in the original action in mistake for the new partys name; ...35

44.

In Adelson v Associated Newspapers Ltd [2008] 1 WLR 585, in the

English Court of Appeal,36 Lord Phillips of Worth Matravers CJ delivering the

judgment of the court said, that under Order 20 rule 5:
31. ... The mistake envisaged in relation to the name of the claimant is one
under which the name used for the claimant is not the name of the person
wishing to sue.

33. ... the mistake that the rule envisages is one of nomenclature, not of
identification. ...

45.

35
36

He explained that:

As the quotation from Hobhouse J, para 26 above, shows, Order 20 rule 5 must be read with the 1980 Act.
Lord Phillips of Worth Matravers CJ, Jacob and Moses LJJ.

- 17 29. An error of identification will occur where a claimant identifies an

individual as the person who has caused him an injury, intends to sue that
person, describes him in the pleadings by the correct name, but then discovers
that he has identified the wrong person as the person who has injured him. An
error of nomenclature occurs where the claimant identifies the correct person as
having caused him the injury, but describes him in the pleadings by the wrong
name.

46.

Here, there was no mistake in the relevant sense, the Plaintiff

wished to sue as the assignee, sued as such and was correctly named. The
mistake was the belief that the assignment was valid and effective.
47.

The Aiolos [1983] 2 Lloyds Rep 25 is directly in point. There, the

plaintiff insurers sued in its own name relying on rights of subrogation under
policies of insurance in respect of certain cargoes. After the expiration of the
limitation periods, the plaintiff sought leave to amend, inter alia, relying on
Order 20 rule 5(3) to add the names of the cargo buyers. The application was
refused. Oliver LJ, as he then was, said it was:
a case of an erroneous belief that the plaintiff, because he was in fact what
he was thought to be, that is, the insurer, had as a result of that certain legal
rights which he did not in fact have. There was therefore no error either as to
the name or as to the identity of the party which fell to be corrected, but simply
an error of law as to the rights possessed by the correctly identified party. Order
20, r. 5(3) simply does not extend to this sort of error and the application under
this rule must, therefore, fail.37

48.

Here, the Plaintiff had made a mistake but it was not a mistake in

the name and Order 20 rule 5(3) did not apply.

Mr Justice Chan NPJ:
49.

I agree with the judgment of Mr Justice Tang PJ and the judgment

of Lord Hoffmann NPJ.

Mr Justice Stock NPJ:

37

P. 30.

- 18 -

50.

I agree with the judgments of Mr Justice Tang PJ and Lord

Hoffmann NPJ.
Lord Hoffmann NPJ:
51.

I agreed after the hearing that this appeal should be allowed and the

order of Deputy Judge Le Pichon refusing the application to amend restored. As

we are differing from a unanimous Court of Appeal, I shall state my own
reasons and in particular explain why in my opinion the authorities relied upon
by the Court of Appeal do not support its conclusion. For this purpose I
gratefully adopt the statement of the facts in the judgment of Tang PJ.
52.

Section 35(3) of the Limitation Ordinance Cap 347 (the

Ordinance) reproduces section 35(3) of the English Limitation Act 1980. It

provides that [e]xcept as provided by section 30 or by rules of court the court
shall not allow a new claim to be made after the expiry of any time limit
under this Ordinance which would affect a new action to enforce that claim.
The equivalent English provision was a codification, with some changes
recommended by the Law Reform Committee, of a long standing rule of
practice that the court would not allow an amendment which would deprive a
party of a limitation defence: see Weldon v. Neal (1887) 19 Q.B.D. 394.
53.

Until the Limitation Act 1980, no one thought there was any

inconsistency between this rule of practice and the power of the court, whether
before or after the limitation period, to substitute as plaintiff a person who had
succeeded to the interest of a party to the litigation. In 1980 this power was
embodied in a rule of court (RSC Ord 15, r. 7, the equivalent of RHC Ord 15
r. 7 in Hong Kong) which went back at least to the Common Law Procedure Act
1852. Examples of its use were to substitute a personal representative who had

- 19 -

succeeded to a deceased party or a company which had acquired the interest of

another company by universal succession.
54.

The reason why there was no inconsistency was because the

substitution of the new party did not deprive the defendant of a limitation
defence. He was in exactly the same position as he was before the substitution,
namely, that he was defendant to proceedings on the same cause of action which
had been started before the expiry of the limitation period. The cause of action
might be good or bad, but it would not have been improved by the substitution.
55.

The language of the 1980 Act, however, caused a problem. Section

35(3) says that the court should not allow a new claim to be made after the
expiry of the limitation period. It defined a new claim to include a claim
which involves the substitution of a new party. If one read this literally to
include a new party who had succeeded to the interest of an existing party, it
would mean, for example, that an executor could not be substituted for an
existing party who died after the limitation period had expired, even though he
had commenced the proceedings in good time. That would obviously have been
an extraordinary result.
56.

It was however the conclusion reached by His Honour Judge

Diamond in Toprak Enerji Sanayi A.S. v. Sale Tilney Technology Plc [1994] 1
WLR 840. But soon afterwards, in The Choko Star [1996] 1 WLR 774,
Mance J disagreed and held that section 35 could not have been intended to cut
down the long-standing power of amendment under RSC Ord 15, r. 7. It is not
easy to summarise his lengthy judgement but he appears to have started by
accepting that the substitution involved a new claim as defined, by virtue of it
involving the substitution of a party: see p. 778C. He held nevertheless that

- 20 -

RSC Ord 15, r. 7 survived intact as an exception to the prohibition in section

35(3).
57.

The present case is very different. Mr Sussex SC accepted that he

did not come within RHC Ord 15, r. 7. The rule applies where the interestof
any party is assigned or transmitted to or devolves upon some other person.
But the plaintiff had no interest which it could transmit to GBRE. It had no
interest at all. The invalidity of the assignment from GBRE to the plaintiff
meant that the plaintiff might as well have been a complete stranger.
58.

Furthermore an amendment to substitute GBRE would have fallen

foul of the old rule of practice. The effect would have been to deprive the
defendants of a limitation defence. Before the amendment, they were being sued
by a party who had no cause of action. Its action was liable to be struck out.
The amendment would have substituted a party who could at any rate assert a
cause of action, whatever its merits might turn out to be. And that party would
be allowed to take up the proceedings after the limitation period had expired.
59.

The peculiarity of this case is that GBRE was at an earlier stage a

party to the proceedings. It commenced the proceedings within the limitation

period. But then it dropped out as it happens, even before service of the writ
removed itself from the action and substituted the plaintiff.

So Mr Sussex

submits, and the Court of Appeal accepted, that it should be allowed to come
back in the action to pursue the same cause of action as that with which it began.
60.

In my opinion, however, it does not matter that it was once a party

to the proceedings.

One has to look at the position as it was when the

application to amend was made. At that time, GBRE was a stranger to the

- 21 -

proceedings. It had substituted the name of the plaintiff on the basis of the
purported assignment but the champertous nature of the transaction meant that
the plaintiff did not acquire GBREs cause of action. The only effective act was
that it dropped out of the action.
61.

Mr Sussex was inclined to accept that if GBRE had simply

discontinued, it could not have started another action after the limitation period
had expired. But, like the judge, I cannot see the difference between this and
having oneself removed from the proceedings without leaving anyone entitled to
carry it on. In the Court of Appeal, Kwan JA said (at para 63) that GBRE had
not abandoned the action because one way or other, either the assignor or the
assignee would want to proceed with the action. The defendants were not
lulled into a false sense of security. But the Limitation Ordinance is not
concerned with the parties states of mind or whether a defendant is lulled into a
false sense of security. A party who starts or seeks to join proceedings after the
expiry of the limitation period is barred simply because he is too late. If GBRE
wanted to preserve the option of prosecuting the action, it should have remained
a party. Of course it would then have been liable for costs if the action failed.
This might have defeated the object of the obscure forensic manoeuvres by
which the plaintiff had been put forward to prosecute the claim.
62.

The Court of Appeal relied upon the judgment of Millett LJ in

Yorkshire Regional Health Authority v Fairclough Building Ltd [1996] 1 WLR

210, which involved the same point as had come before Mance J in The Choko
Star, namely a universal succession to a corporate body which had been
carrying on the action. However, Millett LJ did not approach the question in the
same way as Mance J. He did not accept that the substitution involved a new
claim within the meaning of section 35. The reasoning is not easy to follow (in

- 22 -

Roberts v Gill & Co. [2011] 1 AC 240, 272H Lord Walker of Gestingthorpe
confessed to not understanding it) but it produced the conclusion that a claim
involving thesubstitution of a new party meant the substitution of a new
party which also involves a new cause of action. So Mr Sussex says that the
amendment did not involve a new cause of action. It was the same cause of
action as that which GBRE had asserted when it commenced the proceedings.
63.

In my view, it all depends on what you mean by the same cause of

action. If it means the same cause of action as that of the party for whom the
new party is being substituted, then I agree. That is precisely the position
covered by RSC Ord 15, r. 7. On the other hand, if it means a cause of action
which was at some past stage being asserted by a party to the action and from
which he then dropped out without effectually passing on the cause of action to
someone else, then I do not agree. Furthermore, I do not think Millett LJ had
the present highly unusual situation in mind. The way he put it was (at p 218G):
The question is whether the second limb [of section 35(2)] also includes
claims which involve the addition or substitution of a new party but which do
not involve a new cause of action. In my opinion it does not. As I have already
pointed out, there are two entirely different kinds of substitution provided for
by the rules, one where the party substituted has succeeded to a claim or
liability already represented in the action, and one where he has not. It would
be outside the scope of the Act of 1980 to alter the law relating to the former
kind of substitution, which involves no question of limitation.

64.

It is clear from this passage that what Millett LJ had in mind was a

substitution for a party who had a cause of action already represented in the
action. That is to say, the situation covered by RSC Ord 15, r. 7.
65.

Evans LJ, who gave the other judgment in the Yorkshire Regional

Health Authority v Fairclough Building Ltd case, also thought that a substitution
within RSC Ord 15, r. 7 was not a new claim within the meaning of section

- 23 -

35, although for the slightly different reason that it was not a substitution for
the purposes of the Act. He went on to say (at p. 222H):
The Limitation Act 1980 simply does not apply when one party is substituted
for another in order to proceed with the same claim or cause of action as
before.

66.

It seems to me clear that by as before, Evans LJ meant as before

the substitution and not at some time in the past.

67.

I agree that a case within RSC Ord. 15, r. 7 falls outside section 35.

Whether this is because, as a matter of construction of section 35, it falls outside

the definition of a new claim (as Millett and Evans LJJ thought) or whether it is
a sanctioned exception (as Mance J thought), does not seem to me to matter.
Either way, I have no doubt that the power of the court under RSC Ord 15, r. 7
can be exercised whether the limitation period has expired or not. But I do not
think that this extends to the substitution of a new party outside RSC Ord 15.
r. 7 and I do not think that Millett LJ or Evans LJ had such a claim in mind.
68.

These cases were followed by the Hong Kong Court of Appeal in

Asia-Pac Infrastructure Development Ltd v Shearman and Sterling (a firm)

[2012] 3 HKLRD 321, in which three of the plaintiffs assigned their causes of
action to the fourth plaintiff. This was a straightforward Ord 15, r. 7 case in
which the substitution of the assignees to pursue the same causes of action did
not deprive the defendant of a limitation defence. Mr Justice Cheung CJHC
rightly said that the assignments did not create new causes of action. They were
the same causes of action as the four parties had been suing upon before. The
difference from the present case is that the cause of action upon which GBRE
proposes to sue is not the cause of action which the plaintiff had been suing on
before. Before the amendment application, no one had been suing on that cause
of action. It is the cause of action upon which GBRE had been suing eighteen
months earlier, but that is not the same thing.

- 24 -

69.

The proposed amendment was therefore prohibited by section 35(3)

unless it could be brought within one of the exceptions. The only exception
relied upon by Mr Sussex, and that not very enthusiastically, was RHC Ord. 20,
r. 5(3), which allows an amendment to correct the name of a party where there
has been a genuine mistake. In this case, however, there had been no mistake
about the name of a party. The mistake was about the validity of the assignment
from GBRE to the plaintiff.
70.

For these reasons, I think the judge was right to reject the

application to amend.

She had no power to grant it and it is therefore

unnecessary to consider the discretionary grounds on which she would in any

case have refused it.

- 25 -

(Geoffrey Ma)
Chief Justice

(Robert Tang)
Permanent Judge

(Frank Stock)
Non-Permanent Judge

(Patrick Chan)
Non-Permanent Judge

(Lord Hoffmann)
Non-Permanent Judge

Mr Victor Dawes SC and Mr James Man, instructed by Deacons, for the

appellant in FACV 4 & 5
Mr Victor Dawes SC and Mr James Man, instructed by Kennedys, for the
appellant in FACV 2 & 3
Mr Charles Sussex SC and Mr Paul Carolan, instructed by Cheng, Yeung & Co,
for the respondent