Case Commentary

Civil Procedure — Court of Appeal clarifies the role of pleadings and the availability of limitation defence

Dismissing the Defendants’ appeal with costs, the Court of Appeal discussed the proper role of pleadings, and the interplay between the limitation defence and the doctrine of relation back.

Kyocera Corporation (the successor of Kyocera Optec Co Ltd) v
W Haking Enterprises Limited and W Haking Industries Limited

Reference:     [2020] HKCA 817
Court:        Court of Appeal
Before:       Hon Lam VP, Yuen and Au JJA in Court
Date of Judgment:   9 October 2020
Appearance:   Richard Yip leading Jason Ko (for the successful Plaintiff both at trial and on appeal)


The proceedings below concern a sale of goods dispute where the Plaintiff sued for damages for breach of contract. The central issue was the identity of contracting parties. Relying on contemporaneous documents, in particular a pro-forma invoice (“the Proforma Invoice”) signed by the 1st Defendant, the Plaintiff argued that the 1st Defendant was the contractual counterparty. However, the 1st Defendant argued that the 2nd Defendant was the real contracting party instead, whilst the 2nd Defendant argued that any claim against it would have been time-barred under the Limitation Ordinance (Cap 347) (“LO”).

In Goei Tsusho Co Ltd v Leader Engineering & Construction Ltd [2010] 2 HKLRD 1084, the Court held that the subjective belief of a contracting party as to the identity of the other contracting party was immaterial, because the test as to which party made a contract was objective: “The real question is whether, looked at objectively, a reasonable businessman would have concluded that the 2nd defendant was purchasing on behalf of the 1st defendant.”

Applying such an approach at trial, Recorder Houghton SC concluded that the 1st Defendant was the contractual counterparty and gave judgment for the Plaintiff against the 1st Defendant (see [2020] 1 HKLRD 121).

On appeal, the Defendants advanced numerous grounds of appeal, including inter alia that: –

(1) On the Plaintiff’s pleadings, it was not open to the Recorder to find that the Proforma Invoice constituted a counter-offer between the Plaintiff and the 1st Defendant;

(2) The Recorder erred in not accepting the limitation defence of the 2nd Defendant. 

The Proper Role of Pleadings

 The 1st Defendant argued that since the Plaintiff has never pleaded that the Proforma Invoice was a counter-offer, it had never been afforded an opportunity to address the issue.

Whilst accepting that the legal effect of the Proforma Invoice was not pleaded, the CA held that it was not necessary for the Plaintiff to do so: see CA Judgment at §44.1.

Citing Tsang Wing Man v Chung On Ling (unrep., CACV129/2015, 4 October 2016) and Lo Yuk Sui v Fubon Bank [2020] HKCFA 6, the CA agreed that pleadings are not generally required to identify the legal questions which may arise from the facts: see CA Judgment at §44.2-44.3.

When adjudicating an action, a judge is required, on the facts he finds, to analyse the parties’ legal rights and obligations. When the parties have done a series of acts (a classic example being a “battle of the forms”), the judge has to apply the relevant law (in that case, the law of contract) in order to determine how the acts, as they unfolded, affected the parties’ legal positions. There is no requirement to plead the legal consequences of particular facts: see CA Judgment at §44.4.

In the present appeal, there was accordingly no requirement for the Plaintiff to plead the legal consequence of the issue of the Proforma Invoice, i.e. it formed a counter-offer.

Limitation Defence and the Doctrine of Relation Back

The Plaintiff’s original claim was against the 1st defendant only. The 2nd Defendant was subsequently joined as a new party to the action, as a result of the denial of liability of the 1st Defendant, who asserted throughout that the 2nd Defendant should be liable as the real contracting party.

However, the 2nd Defendant argued that it had a discrete defence of limitation, as it was joined into the action after the expiry of 6 years from the date when the cause of action accrued.

The CA held that whatever may have been the merits of this defence, it should have been raised at the time when the Plaintiff first applied for leave to amend its writ to join the 2nd Defendant as a new party, and the 2nd Defendant cannot advance it after leave is granted: see CA Judgment at §11.4(ii).

Affirming Sun Focus Investment Ltd v Tang Shing Bor [2012] 2 HKC 316, the CA held that limitation could no longer be a live issue at trial after leave to amend is granted, for once leave is granted, the doctrine of relation back under section 35(1)(b) of LO applies.

Section 35(1) of LO provides that any new claim made in the course of the action, except in the case of third party proceedings, will be deemed to have been commenced on the same date as the date of the original action. Section 35(2)(b) defines a “new claim” as including any claim involving the addition or substitution of a new party: see CA Judgment at §11.4(iii).

As the 2nd Defendant did not raise any objection when it was first added as a party to the action, once leave to amend was granted, it was no longer open to the 2nd Defendant to argue limitation as a defence thereafter.


Finally in respect of costs, the CA has also adopted the rule in Komala Deccof & Co SA v Pertamina [1984] HKLR 219 that prima facie the losing party should pay interest from the date when the sum due should reasonably have been paid, and the onus is on the losing party to show “something exceptional” why that usual principle should not apply.

The CA Judgment has clarified the proper role of pleadings and reminded practitioners to be cautious before taking pleading points on appeal. The CA has also highlighted the effect of the doctrine of relation back, which could be a useful tool in dealing with limitation defence.

Richard Yip

Richard has a broad civil practice with a focus on shareholder disputes, commercial litigation, financial regulation, competition law and personal injuries. Prior to joining the Bar, he was a corporate finance solicitor at Herbert Smith Freehills. Richard represented four Respondents in the second case before the Hong Kong Competition Tribunal, where the economic efficiency defence was raised for the first time in Hong Kong, and has acted in several substantial shareholders’ disputes. Find out more

Jason Ko

Jason joined Chambers in 2019 upon completion of pupillage with Mr Philip Dykes SC, Mr Richard Yip, Mr Randy Shek, and Mr Robin Egerton. He is developing a broad civil practice and accepts instructions in all areas of Chambers’ work.

A seasoned mooter during his studies, Jason has represented the University of Hong Kong in the Philip C. Jessup International Law Moot Court Competition (2018), where his team won the Hong Kong Champion and he was ranked among the top 100 oralists internationally, and in the Red Cross International Humanitarian Law Moot (2017), where his team captured the international 1st runner up. Visit Jason’s profile

Disclaimer: This article does not constitute legal advice and seeks to set out the general principles of the law. Detailed advice should therefore be sought from a legal professional relating to the individual merits and facts of a particular case.