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CIVIL PROCEDURE – Court of Appeal clarifies the role of pleadings and the availability of limitation defence

Are parties required to plead not only the relevant facts, but also the legal consequences of those facts? If the limitation defence is raised, what circumstances would render it unavailable? The Court of Appeal shed light on these questions in Kyocera Corporation (the successor of Kyocera Optec Co Ltd) v W Haking Enterprises Limited and W Haking Industries Limited [2020] HKCA 817. Richard Yip, leading Jason Ko, acted for the Plaintiff both at trial and on appeal.

On 9 October 2020, the Court of Appeal (“CA”) handed down its judgment dismissing the Defendants’ appeal with costs. The proceedings below, in which the Plaintiff sued for damages for breach of contract, concern a dispute over the sale of camera lenses.

The Plaintiff argued that the 1st Defendant was the contractual counterparty, based on contemporaneous documents including a proforma invoice signed by the 1st Defendant. 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).

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: –

• The Plaintiff never pleaded that the proforma invoice was a counter-offer, so it was not open to the Recorder to make this finding;

• The Recorder erred in not accepting the limitation defence of the 2nd Defendant, who was joined into the action after the expiry of 6 years from the date when the cause of action accrued.

The CA’s judgment

On the first ground of appeal, the CA confirmed that pleadings are not generally required to plead the legal consequences or questions which may arise from particular facts. Accordingly, there was no requirement for the Plaintiff to plead the legal consequence of the issue of the proforma invoice, i.e. it formed a counter-offer.

As for the 2nd Defendant’s argument that it had a discrete defence of limitation, 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.

Since the 2nd Defendant failed to do so, the doctrine of relation back under section 35(1)(b) of the Limitation Ordinance applies: any new claim made in the course of the action (except for 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 which involves the addition or substitution of a new party.

For further details of the CA’s reasoning, please refer to the Case Commentary.

Richard Yip and Jason Ko acted for the Plaintiff both at trial and on appeal. 

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. The photograph which appears in this article is included for decorative purposes only and should not be taken as a depiction of any matter to which the case is related.