Kensland Realty Ltd v Tai, Tang Chong

CourtCourt of Final Appeal (Hong Kong)
Judgment Date07 March 2008
Citation(2008) 11 HKCFAR 237
Subject MatterFinal Appeal (Civil)
Judgement NumberFACV11/2007
FACV000011/2007 KENSLAND REALTY LTD v. TAI, TANG CHONG

FACV No. 11 of 2007

IN THE COURT OF FINAL APPEAL OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

FINAL APPEAL NO. 11 OF 2007 (Civil)

(ON APPEAL FROM CACV No. 44 of 2006)

_______________________

Between:

KENSLAND REALTY LIMITED
(in compulsory liquidation)

Plaintiff
(Appellant)

and
TAI, TANG CHONG

Defendant
(Respondent)

_______________________

Court: Mr Justice Bokhary PJ, Mr Justice Chan PJ, Mr Justice Ribeiro PJ, Sir Noel Power NPJ and Mr Justice McHugh NPJ
Date of Hearing: 9 January 2008
Date of Judgment: 7 March 2008

_______________________

J U D G M E N T

_______________________

Mr Justice Bokhary PJ and Sir Noel Power NPJ :

1. The Court has been shown a number of English decisions on s.14A of the Limitation Act 1980, which is the United Kingdom provision on which s.31 of the Limitation Ordinance, Cap.347, is modelled. We do not consider an exhaustive discussion of those decisions essential to the disposal of this relatively straightforward appeal. This is not to say that we have any quarrel with any of those decisions. Indeed we consider them helpful. Mr John Scott SC for Kensland has submitted that those decisions, or at least some of them, have put a gloss on the legislation concerned. As to that, we would say this.

Purposive construction …

2. Statutes of limitation seek to provide potential defendants with a measure of repose. They seek to do that without unduly curtailing the right of would-be plaintiffs to pursue their claims. So they always involve striking a balance between competing interests. The balance struck by way of any given limitation provision would reflect a legislative policy. We would not rule out the possibility of a limitation provision that is open to a constitutional challenge, for example, because it so favours defendants as to fall foul of the access to the courts clause of art.35 of the Basic Law. But subject to that possibility, which is always remote and certainly does not arise in the present case, there can be no doubt as to the judiciary’s duty when a limitation provision calls for construction. That duty is to construe such provision so as to promote its underlying legislative policy. Construing a provision of course involves more than reciting its terms. Considerably more is often needed, especially where there are substantial difficulties to be resolved in a purposive way. Putting a purposive construction on a provision is not to be equated with putting a gloss on it.

3. There is nothing unprecedented in the idea of purposive construction aimed at promoting underlying legislative policy. Look at what the Barons of the Exchequer said in Stradling v. Morgan (2 Eliz. I) 1 Plowden 199. They said (at p.205) that “the sages of the law … have ever been guided by the intent of the Legislature, which they have always taken according to the necessity of the matter, and according to that which is consonant to reason and good discretion”. The phraseology may be dated, but the idea is there. Then there is the statement which Chief Justice Abbott famously made in R v. Hall (1822) 1 B & C 123 at p.136 when giving the judgment of the Court of King’s Bench. He said that the meaning of a statutory provision “is to be found not so much in a strict etymological propriety of language, nor even in popular use, as in the subject or occasion, on which they are used, and the object that is intended to be attained”. That statement now bears the imprimatur of the Privy Council, for Lord Romilly MR cited it with approval in The “Lion” (1869) LR 2 PC 525 at p.530 in the course of delivering their Lordships’ advice.

… of statutes of limitation in particular

4. We move now from the general to the particular. It is well-known that statutes of limitation have been described as statutes of repose. That description was first made famous by Story J in Bell v. Morrison 26 US (1 Peters) 350 (1828) at p.360 when giving the judgment of the United States Supreme Court. It has been repeated in the House of Lords (by Lord Simon of Glaisdale in The Ampthill Peerage Case [1977] AC 547 at p.575H) and in this Court (by Chief Justice Li in Wong Tak Yue v. Kung Kwok Wai No.2 (1997-98) 1 HKCFAR 55 at p.67 D-E). What we wish to draw attention to in particular is Story J’s statement on construction. He said (at p.359) that the construction of a statute of limitation should “proceed upon principles … adapted to carry into effect the real objects of the statute”.

5. The case of Haward v. Fawcetts [2006] 1 WLR 682 has been made the subject-matter of a case commentary by Ms Janet O’Sullivan. That commentary is to be found in PRFN 2006, 22(2) 127. We will not conceal our admiration for the refreshing candour of Ms O’Sullivan’s observation at p.130 that “the words of the statute may require some bending when dealing with cases of negligent professional advice”. That is of course not to deny the desirability of legislation free from any need of such treatment. Hence the call at the conclusion of the commentary for legislative reform. But such reform is another day and somebody else’s work. Meanwhile the Court has the present case to deal with on current legislation.

Circumstances of the case

6. Turning to the circumstances of the case at hand, they are shortly stated as follows. On 13 January 2004 Kensland Realty Ltd (“Kensland”), now the appellant, commenced an action against its former solicitors Messrs Tai Tang & Chong (“TTC”), now the respondent. The action is for damages sustained as a result of acting on legal advice tendered to Kensland by TTC, which advice Kensland complains against as negligent. In striking-out proceedings taken out by TTC, the Court of Appeal (Rogers VP and Le Pichon JA) reversed the High Court (Deputy Judge Gill) and dismissed Kensland’s action as time-barred. Kensland now appeals to this Court, seeking the reinstatement of its action.

7. Kensland had entered into an agreement to sell certain shop premises to a company named Whale View Investment Ltd (“Whale View”). Since Kensland was selling as a confirmor, the agreement not surprisingly provided for payment of the balance of the purchase price by such cashier’s orders or cheques in favour of such persons as Kensland may direct. The agreement provided that completion was to take place between 10:00 am and 1:00 pm on 2 September 1997 and that time was of the essence. Whale View did not tender the balance of the purchase price until six minutes after the 1:00 pm deadline. But there was a question of whether the missing of that deadline was due to Kensland’s lateness in giving Whale View a split payment direction. Nevertheless Kensland treated the missing of the 1:00 pm deadline as a repudiatory breach on Whale View’s part, refused to complete and forfeited Whale View’s deposit of $8.25 million. According to Kensland, it took that course on TCC’s advice that such a course might result in Kensland being sued by Whale View for the return of its deposit but that such a suit’s chances of success would be very low. As it turned out, the suit succeeded. We will come to its details later.

Obviously out of time under s.4

8. Where negligent advice gives rise to a cause of action, that cause of action accrues when the person who is given such advice acts on it. So the cause of action on which Kensland’s action against TTC is based would have accrued on 2 September 1997. As has been noted, that action was commenced more than six years after that date. Section 4 of the Limitation Ordinance provides that an action founded on simple contract or tort shall not be brought after the expiration of six years from the date on which the cause of action accrued. Obviously therefore Kensland’s action against TTC is out of time under s.4.

Turning to s.31

9. So the question becomes whether that action was commenced within the time allowed by the ameliorating effect of s.31 of the Limitation Ordinance. This section reads :

“(1) This section applies to any action for damages for negligence, other than one to which section 27 applies, where the earliest date on which the plaintiff or any person in whom the cause of action was vested before him first had both

(a) the knowledge required for bringing an action for damages in respect of the relevant damage; and
(b) a right to bring such an action,

(referred to in this section as the ‘date of knowledge’) falls after the date on which the cause of actionaccrued.

(2) The period of limitation prescribed by section 4(1) in respect of actions founded on tort shall not apply to an action to which this section applies.

(3) An action to which this section applies shall not be brought after the expiration of the period applicable in accordance with subsection (4).

(4) That period is either –

(a) 6 years from the date on which the cause of action accrued; or
(b) 3 years from the date of knowledge, if that period expires later than the period mentioned in paragraph (a).

(5) In subsection (1) ‘the knowledge required for bringing an action for damages in respect of the relevant damage’ means knowledge –

(a) of such facts about the damage in respect of which damages are claimed as would lead a reasonable person who had suffered such damage to consider it sufficiently serious to justify his instituting proceedings for damages against a defendant who did not dispute liability and was able to satisfy a judgment;
(b) that the damage was attributable in whole or in part to the act or omission which is alleged to constitute negligence;
(c) of the identity of the defendant; and
(d) if it is alleged that the act or omission was that
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