CACV76/2017

A A B CACV 63/2017 and B CACV 76/2017 (Heard Together) C C [2018] HKCA 408 D IN THE HIGH COURT OF THE D HONG KONG SPECIAL ADMINISTRATIVE REGION E E COURT OF APPEAL F CIVIL APPEAL NOS 63 & 76 OF 2017 F (ON APPEAL FROM HCA NO 2114 OF 2007) G G _________________ H BETWEEN H SHENZHEN FUTAIHONG 1st Plaintiff I PRECISION INDUSTRY CO LTD I (深圳富泰宏精密工業有限公司) J HONG FU JIN PRECISION 2nd Plaintiff J INDUSTRY (SHEN ZHEN) CO LTD K (鴻富錦精密工業 (深圳) 有限公司) K FIH PRECISION COMPONENT (BEIJING) CO LTD 3rd Plaintiff L L (富智康精密組件 (北京) 有限公司) (formerly known as FOXCONN PRECISION M COMPONENT (BEIJING) CO LTD M (富士康精密組件 (北京) 有限公司)) N N and O O BYD COMPANY LIMITED 1st Defendant P BYD (HK) CO LIMITED 2nd Defendant P GOLDEN LINK WORLDWIDE LIMITED 3rd Defendant Q BYD ELECTRONIC COMPANY LIMITED 4th Defendant Q LEAD WEALTH INTERNATIONAL LIMITED 5th Defendant R R TIANJIN BYD ELECTRONICS COMPANY LIMITED 6th Defendant (天津比亞迪電子有限公司) S S th BYD PRECISION MANUFACTURE CO LTD 7 Defendant T (比亞迪精密制造有限公司) T _________________ U (By Original Action) U V V A - 2 - A B AND BETWEEN B st BYD COMPANY LIMITED 1 Plaintiff C BYD (HK) CO LIMITED 2nd Plaintiff C GOLDEN LINK WORLDWIDE LIMITED 3rd Plaintiff D D BYD ELECTRONIC COMPANY LIMITED 4th Plaintiff E LEAD WEALTH INTERNATIONAL LIMITED 5th Plaintiff E th TIANJIN BYD ELECTRONICS COMPANY LIMITED 6 Plaintiff F (天津比亞迪電子有限公司) F BYD PRECISION MANUFACTURE CO LTD 7th Plaintiff G G (比亞迪精密制造有限公司) H and H HON HAI PRECISION INDUSTRY CO LTD 1st Defendant I I (鴻海精密工業股份有限公司) J FIH MOBILE LIMITED (富智康集團有限公司) 2nd Defendant J (formerly known as FOXCONN INTERNATIONAL K HOLDINGS LIMITED (富士康國際控股有限公司)) K SHENZHEN FUTAIHONG 3rd Defendant L PRECISION INDUSTRY CO LTD L (深圳富泰宏精密工業有限公司) M M HONG FU JIN PRECISION 4th Defendant INDUSTRY (SHEN ZHEN) CO LTD N (鴻富錦精密工業 (深圳) 有限公司) N _________________ O O (By Counterclaim) P P Before: Hon Lam VP, Kwan and Barma JJA in Court Q Q Date of Hearing: 5 June 2018 R Date of Judgment: 18 July 2018 R ________________ S S JUDGMENT T ________________ T U U V V A - 3 - A B The Court: B C 1. These interlocutory appeals were brought by the defendants C in the original action (“the BYD Parties”) against the decisions of Ng J D D (“the Judge”). In CACV 63/2017, the BYD Parties asked this Court to E reverse the Judge’s decisions on 28 June and 5 July 2016 on expert evidence. E Leave to appeal was granted by the Judge. In CACV 76/2017, the BYD F F Parties appealed against the Judge’s decision on 18 July 2016 to allow certain G amendments to the Re-Amended Statement of Claim. Leave to appeal was G granted by the Judge on some grounds. Subsequently, leave was granted H H by the Court of Appeal (Lam VP and Barma JA) on additional grounds. I I CACV 63/2017 J J 2. Mr Yu SC (appearing together with Ms Tong for the BYD Parties) K K succinctly summarized his challenge to the Judge’s directions for expert L evidence at paragraph 3 of his skeleton submissions of 8 May 2018 as L follows: M M “ 3. The BYD Parties’ appeal herein is in respect of the following N parts of the decisions of the Judge (the ‘Subject Decisions’): N (1) the Judge’s dismissal of the BYD Parties’ application for O leave to adduce expert evidence in respect of the issues set O out in §2A(1), (2), (3), (5), (6) & (7) of the BYD Parties’ Summons dated 29.3.2016 (as amended on 24.6.2016) P P (the ‘BYD Summons’) concerning the nature, value and accessibility of information in the mobile phone market; Q Q (2) the Judge’s dismissal of the BYD Parties’ application for leave to adduce expert evidence in respect of the issues set R out in §2B(1), (2) & (3) of the BYD Summons concerning R the trends in, and expansion of, the mobile phone industry at the time of the relevant events; S S (3) the Judge’s formulation of the issues of PRC law as set out in §2B(7) of the Order; and T T (4) the Judge’s formulation of the issue of Taiwanese law as set out in §2C(3) of the Order.” U U V V A - 4 - A B 3. Before we address the specific challenges, it is helpful to remind B ourselves of the relevant principles which guide the Court in determining if C C expert evidence should be admitted and the directions for the same. D D 4. In the Final Report on Civil Justice Reform, the Working Party E identified the following as conditions for admissibility of expert evidence at E paragraph 596: F F (a) The subject matter of the opinion must fall within an area in G which expert evidence may properly be given; G (b) The witness must be qualified as an expert to give the evidence H H of the type in question; I (c) His evidence must be relevant to the issues being litigated. I J J 5. In light of the issues raised in this appeal, we need to elaborate K on conditions (a) and (c). The Working Party cited a judgment of King CJ K in R v Bonython (1984) 38 SASR 45 in which condition (a) was explained: L L “ … This first question may be divided into two parts: (a) whether the subject matter of the opinion is such that a person without M M instruction or experience in the area of knowledge or human experience would be able to form a sound judgment on the matter N without the assistance of witnesses possessing special knowledge N or experience in the area, and (b) whether the subject matter of the opinion forms part of a body of knowledge or experience which is O sufficiently organized or recognized to be accepted as a reliable O body of knowledge or experience, a special acquaintance with which P by the witness would render his opinion of assistance to the court.” P Q 6. On condition (c), the observations of Evans-Lombe J in Barings Q plc v Coopers & Lybrand [2001] PNLR 22 at [45] have often been cited: R R “ … Evidence meeting [condition (a)] can still be excluded by the Court if the Court takes the view that calling it will not be helpful to S S the Court in resolving any issue in the case justly. Such evidence will not be helpful where the issue to be decided is … one on which T the Court is able to come to a fully informed decision without T hearing such evidence.” U U V V A - 5 - A B 7. In Hong Kong, after the implementation of Civil Justice Reform, B our courts can also take account of the probative value of an expert report in C C exercising case management power 1, see the discussion at [3193] of Hong D Kong Civil Court Practice and the authorities cited therein. D E 8. Gone are the days when parties are at liberty to adduce expert E evidence without any control by the court. In addition to the substantive F F conditions discussed above, the use of expert evidence is subject to procedural G requirements contained in the rules to guard against misuse or G mismanagement of expert evidence. As explained in Chok Yick Interior H H Design & Engineering Co Ltd v Lau Chi Lun HCA 1480/2008, 5 May 2010, I parties should apply for expert directions as a step in the preparation of a I J case. Though Order 38, rule 36 provides for application for expert J directions to be made before expert evidence can be adduced, it does not K K prescribe the stage at which such directions are to be applied for. In line L with modern litigation ethos, generally the court expects such directions to be L sought well in advance to give sufficient time to the parties to comply with M M the same before application is made to set down the case for trial. In the N Timetabling Questionnaire to be filed after close of pleadings under Practice N Direction 5.2, parties are required to inform the court if they intend to call O O expert evidence and provide relevant information relating to it. In the P Listing Questionnaire to be filed before the case management conference or P pre-trial review, a party has to confirm that expert evidence has been Q Q exchanged. In addition, if the expert directions provide for meeting of R experts and filing of a joint report thereafter, they should also be complied R with before the application to set down the case for trial. S S T T 1 See the caveat at [23] to [25] in Harvest Treasure Ltd v Cheung Fat Enterprises Ltd [2016] 4 HKLRD U 157 U V V A - 6 - A B 9. The giving of expert directions is very much a matter of case B management. In Chok Yick Interior Design & Engineering Co Ltd v Lau Chi C C Lun, supra, the case management role of the court in giving expert directions D was explained at [7] to [9]: D E “ 7. I wish to stress that application for expert directions is not E a mere formality. It is an integral part of the case management process. As a trial judge, I have seen far too many cases where F the lack of proper preparation of expert evidence resulted in F unnecessary costs and time spent on evidence which is of no help to the resolution of the dispute. And such wasteful exercise cost G G the parties a great deal of money, not only in terms of the fees paid to the experts, but also legal costs spent on paying for the lawyers’ H reading, understanding of the reports, discussing the matter with H the experts and then the time (and costs) of the lawyers explaining and exploring the expert evidence with the judge by way of I submissions and the examination and cross-examination of the I experts during trial. Very often, it is not only the party responsible J for the mismanagement of expert evidence who has to pay such J costs, similar costs have to be incurred (at least on an upfront basis) by his opponent. K K 8. Such wastage is not consistent with the underlying objectives set out in Order 1A Rule 1. Thus, the court, in the performance of L L its case management duty under Order 1A Rule 4, should give expert directions to avoid the mismanagement of expert evidence. And M the parties and their legal representatives have a duty to assist the M court in formulating the appropriate directions (Order 1A Rule 3). Further, the parties and their legal representatives have a duty to N ensure that, once given, expert directions are strictly adhered to. N The experts, in accordance with their overriding duty to the court, O must try their best to comply with the directions. O 9. When parties come to the court to seek expert directions, P the court shall first consider whether expert evidence is required P for the just resolution of the issues before the court. If the court is satisfied that expert evidence is required, it would then consider Q Q what directions should be given in order to further the underlying objectives in the circumstances of the case. Gone are the days R when the court only directed exchange of expert reports before trial R as condition for admission of expert evidence. Nowadays, whilst there should be flexibility in the light of the circumstances of each S case, in order to narrow down the expert issues, the court will usually S consider giving directions for expert meeting and joint report. T Further, the court has the option of ordering the appointment of a T single joint expert under Order 38 Rule 4A.” U U V V A - 7 - A B 10. In light of the great varieties of issues that may arise and the B areas of expertise for which expert evidence may be considered by the court, C C the time and the manner in which an application for expert directions is to be D made must vary depending on the circumstances of the case. In an ordinary D run of the mill situation, like medical reports in personal injury litigation or E E valuation reports in compensation cases in the Lands Tribunal, there are F established protocols for seeking expert directions and parties are expected to F follow those protocols. In a piece of complex litigation, particularly where G G the area in which expert evidence is sought to be adduced is unconventional or H more controversial, the party who seeks expert directions (who also bears the H burden of persuading the court that expert evidence is helpful and I I appropriate) should consider the timing of the application and the materials J to be presented to support the application more carefully. There are cases J where it may be more helpful to have the evidential issues more clearly K K identified with the exchange of documents and witness statements before L expert directions are sought. Also, in some cases it may be useful to have L the intended expert report at hand to explain to the court the nature of such M M evidence and to demonstrate the necessity for having such evidence. These N observations are applicable to some of the contested issues in the present N case. O O P 11. Counsel drew our attention to the observation of Butler-Sloss LJ P in Re M and R (minors) [1996] 4 All ER 239 at p 254 to suggest that if the Q Q expert evidence is arguably relevant but ultimately unhelpful the court R should still admit the same whilst indicating at the same time that the evidence R would carry little weight. That observation was made in a case concerning S S children where there were allegations of sexual abuse. The judge hearing T the application had evidence (without any objection as to admissibility) from T two child psychiatrists that sexual abuse had probably occurred. The judge U U V V A - 8 - A B found otherwise. In the appeal the discussion on admission of expert B evidence focused on the abandonment of the ultimate issue rule by virtue of C C section 3 of the Civil Evidence Act 1972. It was in such context that Her D Ladyship made the observations cited by counsel. D E 12. With respect, we do not regard those observations as militating E against the duty of a judge in exercising the case management function when F F giving expert directions as discussed above. In other words, the court will G not give directions for expert evidence to be adduced (carrying with it the G incidence of substantial costs being incurred on its preparation and court time H H spent on the same) simply on the basis that the court cannot rule out a possibility I of such evidence being relevant and helpful in the sense as discussed above. I J If the applicant for expert directions fails to persuade the court on relevance J and necessity of such evidence, the application should be dismissed. K K 13. Ultimately, it is a case management decision of the court based L L on its assessment of whether expert directions should be given and if so on M what terms. Like other case management decisions, the Court of Appeal will M be circumspect in interfering with such decisions. We would not do so N N unless the decisions were not made in accordance with established principles O or were otherwise plainly wrong. O P P General observations on the BYD application Q 14. The application by the BYD Parties was made by a summons Q of 29 March 2016 which was amended on 24 June 2016. Paragraphs 1 and R R 2 of that amended summons read: S S “ 1. The Plaintiffs by Original Action and the Defendants by Counterclaim (the ‘Plaintiffs’) and the Defendants do have T T leave to: U U V V A - 9 - A (1) adduce expert evidence in respect of the issues set out in B B paragraph 2 below (the ‘Expert Issues’); and C (2) in order to address the Expert Issues, each appoint one C expert with expertise in the following subjects: D (a) Nature of confidential information in the mobile D phone market; E E (b) Expansion of the mobile phone industry at the time of the relevant events; F F (c) IT forensic analysis; G (d) Laws of the People’s Republic of China (‘PRC’); and G (e) Laws of Taiwan; and H H (f) Quantification of loss and damage. I I 2. The experts appointed by the Plaintiffs and the Defendants in each of the above subjects are to answer the following specific J questions: J A. The nature, value and accessibility of information in the K mobile phone market K (1) Whether the 1st, 2nd and/or 3rd Plaintiffs had developed the L L alleged information defined in paragraph 11 of the Re- Amended Statement of Claim (‘RASoC’) as being ‘the M Confidential Information’ and in particular, the information M and documents referred to in Schedules 1 to 13 and the second column of Schedule 14 to RASoC (the ‘Alleged N Information’) or any part thereof. N (2) If the 1st, 2nd and/or 3rd Plaintiffs had developed the Alleged O O Information (or any part thereof): P (i) how the Alleged Information was developed, and the P process involved; Q (ii) approximately how long it would have taken for the Q 1st, 2nd and/or 3rd Plaintiffs to develop the Alleged Information; R R (iii) the approximate costs which would have been spent S on the development of the Alleged Information; S (iv) whether the disclosure of the Alleged Information (or T any part thereof) to a competitor in the industry T would cause real or irreparable harm the Plaintiffs’ businesses and the Plaintiffs’ competitiveness in the U U V V A - 10 - A market, and if so what kind of real or irreparable B B harm would be caused and which parts of the Alleged Information were of that nature; C C (v) whether the Alleged Information (or any part thereof) would be of value to competitors in the industry, and D if so, which parts and the reasons why they would be D of value. E E (3) The purpose, usefulness, importance and commercial value of the Alleged Information in the operation of a business in the F manufacture/assembly of mobile phones and components. F (4) Whether, in 2007 or at any time before 2007, the Alleged G Information (or any part thereof) was available in the public G domain, or has been published or disclosed in the public H domain, and if so which parts of the Alleged Information H were of that nature. I (5) Whether the Alleged Information (or any part thereof) can I be generally regarded as: J (i) ‘trade secrets’ to a business engaging in the J manufacture/assembly of mobile phones and K components, in particular, whether the Alleged K Information discloses secret processes of the trade not generally known or available to other mobile handset L manufacturers in the industry; and/or L (ii) general know how of businesses engaging in the M manufacture/assembly of mobile handsets and/or part M of the skill and knowledge of employees working in N such businesses. N (6) In respect of the production lines of the 1 st, 2nd and/or 7th O Defendants in August 2006 (‘Ds’ Production Lines’): O (i) whether Ds’ Production Lines were similar to the P production lines used by the Plaintiffs in August 2006, P and if so, what the similarities and differences are; and Q Q (ii) whether the establishment and/or operation of Ds’ Production Lines required the use of the documents R set out in the first column of Schedule 14. R (7) Whether the documents set out in the first column of S Schedule 14 of the RASoC are similar to the documents S set out in the second column of Schedule 14 of the RASOC, T if so, what the similarities and differences are. T B. The trends in, and the expansion of, the mobile phone U industry at the time of the relevant events U V V A - 11 - A (1) Whether, during the period between 2004 and 2006, there B B was an increasing desire on the part of major mobile phone brands such as Nokia and Motorola to engage a wider range C of suppliers of mobile handset components so as to increase C competition among suppliers (and thereby obtain better terms). D D (2) Whether, during the period between 2004 and 2006, there E was growth in the demand for mobile phones and mobile E phone components (including increased penetration in emerging markets and increased sales of mobile phone F components resulting from additional handset features) F and, if so, as to the extent of that growth. G (3) Whether the cause of the Defendants’ significant growth in G their mobile handset related business (and turnover from H that business) during the years 2004 to 2006 could have H been the result of: I (i) an increasing desire of major mobile phone brands I such as Nokia and Motorola to engage a wider range of suppliers of mobile handset components so as to J J increase competition among suppliers (and thereby obtain better terms); and/or K K (ii) growth in the demand for mobile phones and mobile phone components, including increased penetration in L emerging markets and increased sales of mobile phone L components resulting from additional handset features; M M and, if so, the extent to which the above considerations could have resulted in the growth in the Defendants’ mobile N handset related business (and the turnover from that business) N during the period between 2004 and 2006. O C. IT forensic analysis: O (1) In respect of the copy or copies of the computer hard P P drive(s) of Liu Xiang Jun and Si Shao Qing made and preserved by the Shenzhen Intermediate People’s Court in Q August 2006 in respect of the Civil Case No. 342 of 2006 Q in the possession of the Shenzhen Court (the ‘Shenzhen Court Hard Drive(s)’): R R (a) (i) whether any document/email contained in the Shenzhen Court Hard Drive(s) (the ‘SCHD S S Documents’) was created and/or inserted into the Shenzhen Court Hard Drive(s) after 10 August T 2006; and T (ii) if the answer to (a)(i) above is in the affirmative, U in respect of each such document/email so created/ U V V A - 12 - A inserted, state when, why, how and by whom B B each such document/email was created and saved or inserted in the Shenzhen Court Hard Drive(s); C C (b) (i) whether any of the SCHD Documents has been altered, edited, modified, replaced or processed D in any other way which may change the content D therein on or after 10 August 2006; and E (ii) if the answer to (b)(i) above is in the affirmative, E in respect of each such document/email so altered, F edited, modified, replaced or processed (if any), F state when, how and by whom the document was altered, edited, modified, replaced or processed; G and G (c) whether any of the SCHD Documents has been H H tampered with in any other way. I (2) In respect of the copy or copies of the Shenzhen Court Hard I Drive(s) which were used by the Beijing JZSC Intellectual Property Appraisal Centre of Judicatory for the preparation J and production of: J (A) Judicial Expert Conclusion (Jing Jiu Si Jian Zhong K K Xin [2007] Zhi Jian Zi No.117); and/or L (B) Judicial Expert Conclusion (Jing Jiu Si Jian Zhong L Xin [2007] Zhi Jian Zi No.118); and/or M (C) Judicial Expert Conclusion (Jing Jiu Si Jian Zhong M Xin [2007] Zhi Jian Zi No.122); and/or N (D) Judicial Expert Conclusion (Jing Jiu Si Jian Zhong N Xin [2007] Zhi Jian Zi No.123); and/or O O (E) Judicial Expert Conclusion (Jing Jiu Si Jian Zhong Xin [2007] Zhi Jian Zi No.124); and/or P P (F) Judicial Expert Conclusion (Jing Jiu Si Jian Zhong Xin [2007] Zhi Jian Zi No.125) Q Q (the ‘Appraisal Centre Hard Drive(s)’): R R (a) (i) whether any document/email contained in the Appraisal Centre Hard Drive(s) (the ‘ACHD S Documents’) was created and/or inserted into the S Appraisal Centre Hard Drive(s) after 10 August 2006; and T T (ii) if the answer to (a)(i) above is in the affirmative, in respect of each such document/email so created/ U U V V A - 13 - A inserted, state when, why, how and by whom B B each such document/email was created and saved or inserted in the Appraisal Centre Hard Drive(s); C C (b) (i) whether any of the ACHD Documents has been altered, edited, modified, replaced or processed D in any other way which may change the content D therein on or after 10 August 2006; and E (ii) if the answer to (b)(i) above is in the affirmative, E in respect of each such document/email so altered, F edited, modified, replaced or processed (if any), F state when, how and by whom the document was altered, edited, modified, replaced or processed; G and G (c) whether any of the ACHD Documents has been H tampered with in any other way. H I D. Laws of the PRC I (1) Whether the matters pleaded in paragraphs 20 to 29 of the J RASoC (in support of the Plaintiffs’ breach of confidence J claim) give rise to civil liability under PRC law on the part of the Defendants or any of them, whether under Article 10 K of the Law of the People’s Republic of China against Unfair K Competition or otherwise. L (2) Whether the Defendants (or any them) owe any duties to L the Plaintiffs (or any of them) in respect of the Alleged M Information under PRC law. M (3) Whether the matters pleaded in paragraphs 39 and 40 of the N RASoC (in support of the Plaintiffs’ claim for inducing N breach of contractual and fiduciary duties) give rise to civil liability under PRC law on the part of the Defendants O or any of them. O (4) Whether the matters pleaded in paragraphs 41 to 43 of the P P RASoC (in support of the Plaintiffs’ claim for conspiracy) give rise to civil liability under PRC law on the part of the Q Defendants or any of them. Q (5) Whether the PRC law on the part of the Defendants or any R of them, and whether PRC recognizes the concepts of R ‘constructive trust’ and ‘dishonest assistance’ pleaded and relied upon by the Plaintiffs in paragraphs 44 to 47 of the S S RASoC. (6) Whether, under PRC law, Liu Xiangjun, Si Shaoqing, Liu T T Wuping, Zhang Jian, Wang Wei, Sun Jian, Jackie Zhang San Hong, Henry Zhang Dao Chun and Zhang Yue Hong U (together the ‘Employees’) owed duties in contract and/or U V V A - 14 - A in confidence and/or fiduciary duties to the Plaintiffs or B B any of them not to disclose the Alleged Information or any part thereof to any third party, and whether such duties C continued after the termination of their employment. C (7) Whether, under PRC law, whilst in the course of their D employment, the Employees owed to the Plaintiffs duties D of good faith and fidelity. E (8) Whether the matters pleaded in paragraphs 61 to 86 of the E ReRe-Re-Amended Defence and Counterclaim (‘RADC’) F (in support of the claim by the Plaintiffs by Counterclaim F for unlawful interference with business and economic interests) give rise to civil liability under PRC law on the G part of the Defendants by Counterclaim or any of them. G (9) Whether the matters pleaded in paragraphs 120 to 122 of H the RADC (in support of the claim for conspiracy by the H Plaintiffs by Counterclaim) give rise to civil liability under I PRC law on the part of the Defendants by Counterclaim I or any of them. J E. Laws of Taiwan: J (1) Whether the matters pleaded in paragraphs 87 to 110 of the K RADC (in support of the defamation claim by the Plaintiffs K by Counterclaim) give rise to civil liability under PRC law on the part of the 1st Defendant by Counterclaim under the L L laws of Taiwan. M (2) Whether the matters pleaded in paragraphs 111 to 119 of the M RADC (in support of the slander claim by the Plaintiffs by Counterclaim) give rise to civil liability under PRC law N on the part of the 1st Defendant by Counterclaim under the N laws of Taiwan. O (3) Whether the 1 st Defendant by Counterclaim (being a O company listed in Taiwan) was under a duty to provide the P 1st Announcement (as defined in the RADC) to the Taiwan P Stock Exchange under the provisions of Taiwanese laws set out in paragraph 12.14 of the Amended Reply and Q Defence to Counterclaim. Q F. Quantification of loss and damage R R (1) Whether the Plaintiffs have sustained the losses asserted in paragraphs 33(i), (ii) and (iii) of the RASoC, and S repeated in paragraphs 40, 43 and 47 of the RASoC (and, S if so, in what amount); T T (2) The amount of the profits for which the Defendants are liable to account to the Plaintiffs by using the Alleged U U V V A - 15 - A Confidential Information (paragraph 35 of the RASoC); B B and C (3) Whether the Defendants have sustained the losses asserted C in paragraphs 86, 98 to 100, 107 to 109, 116 to 118, 122 of the RAD & C/C.” D D 15. The application was not supported by any affidavit or affirmation. E E F 16. With respect, the summons did not inform the court meaningfully F as to the substance of the expert evidence which the BYD Parties sought to G G adduce. The difficulty is compounded by the wide scope of confidential H information as pleaded in the pleadings and the lack of precise information H as to the bases on which the BYD Parties contested the confidential nature I I of such information. In a nutshell, the defence of the BYD Parties only put J forward a general non-admission and denial in this respect. J K K 17. In the light of that, the way in which the summons formulated L the expert evidence is, with respect, unhelpful. To start with, taking the L example of expert evidence on the subjects (a) and (b) in paragraph 1(2) of M M the summons, it does not provide any information as to the precise expertise N of the experts, not to mention the identities of the relevant experts and their N qualifications. Even reading these paragraphs together with the specific O O questions in paragraph 2 of the summons, different persons could have P different understandings of the scope of expert evidence, and giving P directions in such format could generate unnecessary disputes with experts Q Q engaged by different sides providing evidence on different levels, thereby R resulting in the proliferation of issues and adding unnecessary confusion to R the trial. S S T 18. In the circumstances of this case, we are of the view it would T have been much better if the issues on confidential information were more U U V V A - 16 - A B precisely defined, whether through particulars, interrogatories or witness B statements, before an application was made for expert directions. If it is not C C possible to formulate the expert issues more precisely, the party applying for D expert directions should produce a draft expert report to support the application D so that the court would be able to assess how relevant and necessary it is to E E have such evidence at the trial. F F 19. In short, in view of the lack of positive case on the part of the G BYD Parties and in the absence of draft expert reports, the BYD Parties G could only rely on bare assertions from counsel in the attempt to persuade H H the court that it would be helpful to have expert evidence. As demonstrated I below, it is not an easy task. I J J Paragraph 2A of the BYD summons: evidence relating to the nature, value and accessibility of alleged confidential information K K 20. At the hearing on 28 June 2016, counsel for the BYD Parties L L (not Mr Yu) told the Judge that paragraph 2A(1) and A(2)(i) to (iii) of the M BYD summons should be decided in the same way and as the Judge ruled M against the application under 2A(1), A(2)(i) to (iii) also had to fail. The N N same stance was adopted in this appeal. O O 21. As held by the Judge, paragraph 2A(1) is plainly a question of P fact. Paragraph 2A(2)(i) to (iii) are also questions of fact. Mr Yu P Q submitted however that expert evidence could also be adduced in respect of Q questions of fact. As a general statement, that might be correct. However, R R the central issue is whether the intended expert evidence could assist the S court in determining these questions of fact. The essence of the Judge’s S decision, read in light of his reference to the judgment in Barings plc v T T Coopers & Lybrand, supra, was that he could not see how the experts could U assist in that regard. U V V A - 17 - A B 22. Notwithstanding the efforts of Mr Yu, we are not persuaded that B the Judge erred in that assessment. To start with, it is still very unclear to us C C what kind of experts the BYD Parties are going to call in these respects and D what expert opinions could be offered that would assist the court in finding D if the Foxconn Parties had developed the information. On the facts of this E E case, we are not convinced simply on the basis of counsel’s submission that F whether the information concerned had the quality of confidence has to be F explained by experts. In short, we are not persuaded that the Judge was G G plainly wrong in holding that the proposed expert evidence was not helpful. H H 23. Turning to paragraph 2A(2)(iv), the Judge refused to give I expert directions because insofar as the Foxconn parties contended that they I J suffered real and irreparable harm, this would be a question of fact to be J proved by their evidence. The Judge did not think expert evidence could K K assist. L L 24. Mr Yu submitted that the question is also relevant to the issue M whether the information had the quality of confidence. Be that as it may, M like the previous questions, on the materials before us, Mr Yu failed to N N persuade us that the Judge was plainly wrong in holding that expert evidence O was not helpful. O P P 25. Paragraph 2A(2)(v) relates to the value of the information to Q competitors. The Judge held that the question can be determined on factual Q evidence and inferences to be drawn therefrom and expert evidence would R R not be helpful. S S 26. Mr Yu repeated the same argument, viz that the question also T relates to the issue whether the information had the quality of confidence. T U He also said that the objective value of the information to a competitor is a U V V A - 18 - A B matter of objective fact which required expertise from someone in the mobile B phone industry to explain. C C 27. Based on the materials before us, the information in question D D does not involve any highly technical matters. Again we are not persuaded E that the Judge was plainly wrong in holding that he did not need an expert to E assist in resolving this issue. F F G 28. Paragraph 2A(3) seeks expert evidence on the purpose, G usefulness, and commercial value of the information in the operation of a H H business in manufacture or assembly of mobile phones. The Judge refused I on the ground that the question framed was too general and he was not I satisfied that expert evidence would be helpful. J J 29. Mr Yu advanced similar submissions as those he made in respect K K of paragraph 2A(2)(v). L L 30. We repeat the same observations we made at [27] above. M M In addition, we also agree with the Judge that the question formulated is too N general and the court would be abdicating its case management responsibility N to give such general endorsement for expert evidence. If there are any O O specific matters that the BYD Parties regard as necessary to have expert P evidence on they have not spelt them out. P Q Q 31. Paragraph 2A(5) relates to the question if the information is R generally regarded as trade secrets or general knowhow and/or part of the R skill and knowledge of employees working in the business of mobile phone S S manufacturing / assembly. The Judge refused on the basis that the issues T are questions of mixed fact and law for the court and he was not satisfied that T expert evidence was helpful. U U V V A - 19 - A B 32. Mr Yu again made similar submissions as those advanced in B respect of paragraph 2A(1) and A(2)(i) to (iii). C C 33. We again repeat the observations at [21] and [22] above. D D E 34. Paragraph 2A(6) seeks expert evidence (i) on the comparison E of the production lines of the BYD Parties with those of the Foxconn Parties F F and (ii) to assess if the establishment and/or operation of the BYD’s G production lines required the use of the documents in the first column of G Schedule 14 of the Re-Amended Statement of Claim. The Judge refused H H on the basis that (i) is a question of fact regarding the state of affairs back in I August 2006 and as an expert appointed today could not inspect those I production lines as in 2006 the court was not satisfied that any expert J J evidence would be helpful. He was also of the view that (ii) is not a K question that the court needs to resolve. K L 35. Mr Yu submitted that expert evidence could assist in terms of L M technical aspects in the comparison. He also said that even without M inspection, experts could provide their opinions based on factual information N N from the parties on the features of the production lines. However, counsel O have not identified any specific aspects which involve technical expertise in O the comparison and no draft expert evidence has been produced. In the P P circumstances, and in light of the general observations we made above, we Q are not satisfied that the Judge was plainly wrong in concluding that expert Q evidence would not be helpful. R R 36. Mr Yu further submitted that the Judge was wrong in holding that S S (ii) is not a question that needed to be adjudicated upon in light of T paragraph 27(a)(2) of the Re-amended Statement of Claim which was denied T U U V V A - 20 - A B by the BYD Parties at paragraph 30(3) of the Re-amended Defence and B Counterclaim. C C 37. Paragraph 27(a)(2) of the Re-amended Statement of Claim D D reads: E E “ (2) Further, the Plaintiffs rely on the fact that by about August 2006, the 1st, 2nd and 7th Defendants had established a production F line which was highly similar to the production system of the F Plaintiffs and had since August 2006 at the latest been using G at least those forms and tables set out in the first column of G Schedule 14 hereto which bear striking similarity to the operation documents developed by the Foxconn Technology H Group and used by the Plaintiffs as set out in the second column H of Schedule 14 hereto which form part of the Operation Manuals and the Records of Suppliers and Customers referred I I to in paragraphs 11(a) and (b) above.” J J 38. Paragraph 30(3) of the Re-amended Defence and Counterclaim K reads: K L “ (3) As regards Paragraph 27(a)(2): L st (i) The 1 Defendant had successfully been operating M production lines for the production of mobile handset M components (other than batteries) since at least 2003; N (ii) The 1st Defendant had successfully been operating N production lines for the production of rechargeable batteries since 1995; O O (iii) It is not admitted that the Plaintiffs’ production system is highly similar to that of the 1 st, 2nd and 7th Defendants P as alleged; P (iv) If the 1st, 2nd and 7th Defendants’ production system is Q similar or highly similar to that of the Plaintiffs as Q alleged (which is not admitted), it is denied that this was due to any misuse of the Alleged Confidential R R Information or any confidential information or trade secrets of the Plaintiffs as alleged or at all; S S (v) It is not admitted that the documents set out in the first column of Schedule 14 are documents of the Defendants T or that they are all strikingly similar to the documents T in the second column of Schedule 14; U U V V A - 21 - A (vi) It is not admitted that the Defendants made use of the B B documents set out in the first column of Schedule 14 as alleged; C C (vii) The Defendants reserve the right to provide further particulars after discovery and/or service of D interrogatories herein and also reserves it [sic] right to D challenge the authenticity of the documents set out in the second column of Schedule 14 at trial; E E (viii) Save as aforesaid, Paragraph 27(a)(2) is not admitted.” F F 39. In holding that (ii) was not a question that requires the court’s G adjudication at trial, the Judge said: G H “ In the view of this Court that is not a question which requires the H Court’s adjudication at trial. Whether or not the establishment of the BYD Parties’ production lines required the use of their own I documents is beside the point, the real question for the purposes of I determining whether there has been a breach of confidence is J whether BYD Parties did in fact make use of, or copied, Foxconn’s J documents -- Foxconn parties’ documents which are set out in the second column of schedule 14 as well as some or all or none of the K documents set out in schedule 1 to 13. K So that is a fact -- that is a pure question of fact, as we are concerned L with a past act or past acts on the part of the BYD Parties, that is L not a matter of opinion evidence and this Court is not satisfied that M expert evidence on what happened 10 years or 12 years or more M years ago will shed any light or be helpful to the Court in determining whether BYD Parties have made used of Foxconn’s N documents so for that reason this Court will refuse expert evidence N on question A6(2). That’s the Court’s ruling.” O O 40. We cannot find any fault in this analysis by the Judge. In any P P event, in the absence of concrete evidence from the BYD Parties demonstrating Q the relevance and necessity of expert evidence to resolve the pleaded issues on Q those paragraphs, the Judge was entitled to refuse to direct that expert R R evidence on (ii) to be obtained which would only lead to proliferation of S unhelpful expert issues that could lengthen the trial and increase the costs of S the litigation. T T U U V V A - 22 - A B 41. Turning to paragraph 2A(7) of the summons, it seeks expert B evidence on comparison of documents in Schedule 14 of the Re-amended C C Statement of Claim. The judge refused on the ground that the Court can D reach its conclusion based on evidence of factual witness and submissions D from counsel and expert evidence is not helpful. E E 42. Mr Yu submitted the comparison requires understanding of the F F technical operations and procedures, in respect of which expertise is required. G Counsel said it is not possible for a layman or the court to fully understand G the documents without the assistance of an expert. H H I 43. As we said, given the nature of documents in question, we are I not satisfied, on counsel’s submissions alone, that expert evidence is required. J J As with the other items, we are not satisfied that the Judge was plainly wrong K in finding expert evidence would not be of assistance. K L L 44. All in all, we are not satisfied that the Judge had erred in any of M his rulings regarding these paragraphs and this Court has no basis to intervene M on any established grounds so as to disturb his case management decisions. N N Paragraph 2B of the BYD summons: evidence relating to trends in, and O O expansion of, the mobile phone industry P 45. Mr Yu’s submissions followed the Judge’s grouping of the P questions raised in para 2B into 2 categories: (1) paragraph 2B(1) and (3)(i); Q Q (2) paragraph 2B(2) and (3)(ii). We would discuss these questions in the R same manner. R S S 46. The first group of questions are: T T U U V V A - 23 - A B (a) Whether during the period between 2004 and 2006 there was an B increasing desire on the part of major mobile phone brands to C C engage a wider range of suppliers; D (b) Whether the cause of the BYD Parties’ significant growth in D their mobile handset business during that period could have been E E the result of that increasing desire. F F 47. These questions related to the defence case of the BYD Parties G G raised at paragraph 34(3) of the Re-amended Defence and Counterclaim. H In that paragraph, the BYD Parties pleaded as follows: H I “ (3) The significant growth in the Group’s mobile handsets and I components business for the years ended 31 December 2005, 31 December 2006 and the first 6 months of 2007 was due to, J inter alia: J (i) The Group’s extensive knowledge, experience and K contacts developed in other business areas, in particular, K its long term relationship with major mobile phone brands L such as Nokia and Motorola; L (ii) The increasing desire of major mobile phone brands M such as Nokia and Motorola to engage a wider range of M suppliers of mobile handset components so as to increase competition amongst suppliers (and thereby obtaining N better terms); N (iii) Rapid growth in the demand for mobile phones and mobile O O phone components, including increased penetration in emerging markets and increased sales of mobile phone P components resulting from additional handset features.” P Q 48. The Judge ruled against the proposed expert direction for these Q questions because the court’s concern is limited to whether or not either R R Foxconn’s clients or BYD’s clients had the alleged increasing desire so that S BYD’s turnover had significant growth during that period. He was of the S view that the questions posed at paragraph 2B(1) and (3)(i) are too general T T to be helpful. Further, as the parties were in the market, they should be able U U V V A - 24 - A B to adduce factual evidence in these respects. He was of the view that the B desire of these major mobile phone companies is a question of fact and not C C for expert opinion. D D 49. Mr Yu submitted the Judge erred in holding that the questions E were too general. He said the Judge could have restricted the scope of the E issues. But in the absence of any suggestions from counsel (and there were F F none), the Judge was not obliged to reframe the issues though he had the G discretion to do so. We cannot see any valid ground for this Court to disturb G the Judge’s assessment on the unhelpful nature of these questions and his H H exercise of discretion in refusing to grant leave. I I 50. Mr Yu submitted that these were matters of historical industry/ J J market trends which require evidence from market or financial analysts who K could locate relevant market data or market research materials and provide K the court with their opinion and analysis. He also submitted that experts can L L assist in providing their understanding and experience of the development of M the market and why players behaved in a particular way in such context. M The experts could also provide an assessment of the impact of the changing N N industry and market dynamics; the downward pressure on pricing and on O supply chain logistics, the competitive environment, the tight margin in the O handset market at the time and the pace at which the market was changing. P P Experts could assist the court to understand against such background and he Q could assist in assessing the importance for vendors to look for a range of Q competitive and reliable suppliers. R R S 51. We note that many of these points were not canvassed before the S Judge. In any event, these were bare submissions without any evidential T T basis. This highlights the unsatisfactory manner in which these U applications were brought as mentioned above. Counsel can easily paint a U V V A - 25 - A B very grand picture out of their ingenuity in formulating a case for expert B evidence. However, without any solid evidential basis, we are respectfully C C of the view that such bare submissions cannot form a proper ground for D blanket directions to be given for such expert evidence to be adduced. As D we said earlier, to entertain such requests would be an abdication of the E E court’s case management duty and run the risk of substantial proliferation of F expert issues which, ultimately, may not be of any assistance to the court. F G 52. In our judgment, the Judge was right in rejecting these G submissions and holding that the questions as formulated were unhelpful in H H terms of identifying the need for expert evidence and the scope for the same. I I 53. The second group of questions relate to the growth in demand J J in 2004 to 2006 for mobile phones and their components and its correlation K with the growth of the mobile phone related business of the BYD Parties. K L L 54. The Judge refused the application related to these questions on the M ground that they are questions of fact and statistical evidence can be adduced. M Though expert evidence could include facts observed by the experts, the N N production of such pure factual evidence does not require expert directions. O O 55. Mr Yu submitted that the evidence would involve opinion P and/or analysis by the experts, as these are matters of objective fact which P require expertise to explain and comprehend. Q Q R 56. Again in the absence of any evidential basis for such assertions R and without anything concrete to demonstrate the need for expert assistance, S S we cannot fault the Judge for not endorsing the calling of experts in these T regards. T U U V V A - 26 - A B Paragraph 2D(5) of the BYD summons: evidence relating to PRC law B C 57. The Judge granted leave for expert evidence to be adduced on C PRC law and extended it beyond the question formulated by the BYD Parties D D which was restricted to the concepts of constructive trust and dishonest E assistance. He acceded to the request by the Foxconn Parties to permit PRC E law expert evidence to embrace civil liability under PRC law on the matters F F pleaded in paragraphs 44 to 47 of the Re-amended Statement of Claim. G G 58. In so doing, the Judge applied the established approach on H double actionability in claims based on acts occurring in other jurisdictions H as discussed in First Laser Ltd v Fujian Enterprises (2012) 15 HKCFAR 569 I I at [66] to [69]. Mr Yu did not dispute that approach as a matter of substantive J J law. K K 59. However, Mr Yu submitted that the Judge should not have L reformulated the scope of PRC law expert evidence when the Foxconn Parties L did not plead any concepts under the PRC law to give rise to civil liability in M M the Amended Reply and Defence to Counterclaim. N N 60. Mr Wong SC (appearing with Mr Law and Mr Chiu for the O O Foxconn Parties) submitted that the Foxconn Parties can simply rely on the P implied joinder of issue. P Q 61. We do not find it necessary to decide whether the relevant Q concepts under the PRC law have to be pleaded specifically in the Amended R R Reply and Defence to Counterclaim. The parties can reflect on their S positions after the expert evidence has been obtained. S T T 62. In our judgment, in light of the established and undisputed U approach on double actionability, the Judge was perfectly entitled to exercise U V V A - 27 - A B his case management discretion to give directions for expert evidence on B PRC law in the way he did to avoid multiple applications for expert directions C C and repeated rounds of expert evidence. D D 63. We see no merit in Mr Yu’s submission that the BYD Parties E would be prejudiced by their expert being required to prepare PRC law E evidence on “the extremely wide question of civil liability under PRC law”. F F We do not foresee any difficulty for a reasonably competent expert to provide G an answer to that question. Further, after exchange of expert reports, the G directions also provide for meeting of the experts to prepare a joint report. H H There is no question of any expert being taken by surprise. I I Paragraph 2E(1) of the BYD summons: evidence relating to Taiwanese law J J 64. The Judge also reformulated the direction for Taiwanese law to K K provide generally for legal and or contractual duty to make announcement in L the context as pleaded in paragraph 12.14 of the Amended Reply and Defence L to Counterclaim as opposed to restricting it to the specific provisions of M M Taiwanese law as pleaded in that paragraph. N N 65. Mr Yu took a similar pleading point in this regard as in the case O O of PRC law. P P 66. The Judge actually made the reformulation on the express basis Q that the Foxconn Parties would amend the Amended Reply and Defence to Q Counterclaim if the expert evidence referred to listing rule provisions giving R R rise to contractual duty to make the announcement. S S 67. As submitted by Mr Wong, the Judge had a case management T T discretion to give the directions in the way he did, bearing in mind the U underlying objectives in Order 1A, rule 1 and the court’s duty in case U V V A - 28 - A B management in Order 1A, rule 4. As in the case for expert evidence on B PRC law, we cannot see any unfairness arising from such directions. C C Disposition of CACV 63/2017 D D 68. For the above reasons, we do not find any merit in the appeal. E E We shall dismiss the appeal and make a costs order nisi that the BYD Parties F should pay the costs of the Foxconn Parties on a party to party basis with a F certificate for three counsel, such costs are to be taxed if not agreed. G G H CACV 76/2017 H I 69. We now turn to consider the other appeal of the BYD Parties I J (CACV 76/2017)2. This is against the judgment of Ng J dated 18 July 2016, J in which leave was granted to the Foxconn Parties to amend in violet the K K Re-amended Statement of Claim (“RASoC”). L L The existing claims and disputed amendments M M 70. The existing claims of the Foxconn Parties, as summarised in N N the judgment below, are as follows: O O “ 3. In a nutshell, Foxconn Parties’ case is that BYD Parties have wrongfully received and used their confidential information P which they had developed for the effective operation of the P group’s business. The confidential information, constituting Q Foxconn Parties’ “trade secrets”, included inter alia operation Q manuals and records of suppliers and customers. R 4. As far as wrongful receipt is concerned, it is pleaded that, R in or around 2005 and 2006, BYD Parties received the confidential information through 9 of Foxconn Parties’ employees. The S S 9 employees wrongfully disclosed the confidential information to BYD Parties in breach of their duties, having been induced and T T 2 The judge granted leave to appeal limited to the issue of prejudice and hence the exercise of discretion (see decision dated 15 March 2017, §10). The Court of Appeal (Lam VP and Barma JA) granted leave U to appeal on all other proposed grounds on 14 June 2017. U V V A - 29 - A procured by BYD Parties to do so. In relation to each of the 9 B B employees, their breaches of duties and disclosure of confidential information have been specifically pleaded in paragraphs 20 to C 26C of RASoC while the confidential information in question C which they had wrongly disclosed is specifically pleaded in Schedules 1–13. It is further pleaded that BYD Parties knew the D information was trade secrets and the employees had breached D their duties. E E 5. As far as wrongful use is concerned, it is pleaded that by about August 2006, BYD Parties had set up a production line F highly similar to Foxconn Parties’ production system. It is also F pleaded that BYD Parties have made use of the confidential information and modified it for their own use (RASoC G G paras 27-32). In this regard, Foxconn Parties set out H (1) in Schedule 14 various operational and business H documents of both parties which are said to bear “striking similarity” (paragraph 27(a)(2) RASoC); and I I (2) in Schedule 15 the confidential information said to have been modified by BYD Parties for their own use J J (paragraph 29(1) RASoC). K 6. On the basis of the aforesaid, Foxconn Parties claim K against BYD Parties for: L (1) breach of their duty of confidence towards Foxconn Parties L (“breach of confidence”) (RASoC paragraphs 20-38); M (2) inducing breach of contractual and fiduciary duties M (“inducing breach of duties”) (RASoC paragraphs 39-40); N N (3) conspiracy (RASoC paragraphs 41-43); and O (4) dishonestly assisting the 9 employees in their breaches of O fiduciary duties (“dishonest assistance”) (RASoC paragraphs 44-47).” P P Q 71. According to the Foxconn Parties, their application to amend Q RASoC was for two reasons: to include in their pleading facts arising from R R the discovery made by the BYD Parties in their list of documents dated 4 July S 2014 (“the BYD Discovery”), and to provide further and better particulars S of the existing claims 3. T T U 3 1st affirmation of Xiong Yong-ai filed on 30 November 2015, §3 U V V A - 30 - A B 72. The disputed amendments are concerned with these allegations: B C (1) the involvement of three additional employees of the Foxconn C Parties viz Dong Gening, Chen Quan and Akin Wang, and the D D duties which they each owed to the Foxconn Parties (the E opening paragraph of §16 and §§16(10) to (12) of the E amendments); F F (2) the wrongful acts and breaches of duties committed by the three G G additional employees (§§26D to 26F and Schedules 13A to 13C H of the amendments); and H I (3) the additional confidential information which these I three employees had wrongfully disclosed to the BYD Parties J J between 2003 and 2005 and which the BYD Parties obtained K for their own use (Schedules 13A to 13C of the amendments). K L L 73. The BYD Parties opposed the disputed amendments on the M basis that: M N (1) the amendments have the effect of introducing new causes of N action which are time barred under the Limitation Ordinance, O O Cap 347; P P (2) the new causes of action do not arise out of the same or Q substantially the same facts as the causes of action already Q pleaded so as to fall within the ambit of Order 20 rule 5(5)4 of R R S S T 4 O 20 r 5(5) reads: “An amendment may be allowed under paragraph (2) notwithstanding the effect of T 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 U already been claimed in the action by the party applying for leave to make the amendment.” U V V A - 31 - A B the Rules of the High Court and sections 35(5)5 and (6)(a)6 of B 7 the Limitation Ordinance ; and C C (3) even if the amendments satisfy the requirements of Order 20 D D rule 5(5), the court should not exercise its discretion to allow E the amendments as it would not be just to do so, taking into E account (a) the extreme delay on the part of the Foxconn Parties F F in introducing the amendments; and (b) the serious prejudice to G the BYD Parties which cannot be compensated by costs, if the G amendments are allowed. H H I The judgment below I J J 74. The judge applied the well-established three-stage test8 set out K in §16 of the judgment: K “ (1) Stage 1: Is it reasonably arguable that the opposed L L amendments are outside the applicable limitation period? If not, then the amendments fall to be considered in accordance M with the general principles governing amendment M applications. N (2) Stage 2: If the answer to (1) is yes, do the proposed N amendments seek to add or substitute a “new cause of action”? O If not, then again the amendments fall to be considered in O accordance with general principles. P (3) Stage 3: If the answer to (2) is yes, does the new cause of P action arise out of the same or substantially the same facts as are already in issue in the existing claim? If not, the Q amendments cannot be allowed. If yes, then the court Q R 5 Section 35(5) reads: “Rules of court may provide for allowing a new claim to which subsection (3) R 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.” S 6 Section 35(6)(a) reads: “The conditions referred to in subsection (5) are – (a) in the case of a claim S 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 T the party applying for leave to make the amendment;” T 7 Unless otherwise stated, all subsequent statutory provisions referred to are in the Limitation Ordinance. U 8 Ballinger v Mercer Ltd [2014] 1 WLR 3597 at §15; Diamandis v Wills [2015] EWHC 312 (Ch) at §46 U V V A - 32 - A retains a discretion to allow or refuse the amendments in B B accordance with general principles.” C 75. The judge concluded that: C D D (1) For Stage 1, the answer is yes. The BYD Parties do have a E reasonably arguable limitation defence9. E F (2) For Stage 2, the answer is no. Taking the matter at the highest F level of generality, the disputed amendments do not introduce G G new causes of action, but are “further instances” of the same H causes of action or alternatively “further and better particulars” H of the “existing allegations of wrongdoings by BYD Parties”, I I and are permissible under the law10. J J (3) If contrary to his ruling for Stage 2, Stage 3 is to be considered, K the answer is yes. Even if the disputed amendments do have K the effect of introducing new causes of action, they arise out of L L substantially the same facts as are already in issue in the existing M claims11. M N (4) On the exercise of discretion, where there is an abundance of N contemporaneous documentary evidence, it is for the BYD O O Parties (the burden being on them) to clearly demonstrate the P existence of real prejudice which cannot be compensated by an P appropriate costs order and BYD Parties’ evidence falls far Q Q 12 short of demonstrating that . R R S S 9 Judgment, §31 T 10 Judgment, §48 T 11 Judgment, §63 U 12 Judgment, §74 U V V A - 33 - A B The main contentions on appeal B C 76. Mr Yu, SC submitted on behalf of the BYD Parties that the C judge erred in law in his assessment under Stage 2 and Stage 3 and in finding D D that the conditions under Order 20 rule 5(5) and section 35(6)(a) have been E satisfied. Further, it was contended that the judge erred in principle in the E exercise of his discretion to allow the disputed amendments, in that he F F misapprehended the facts and/or took into account irrelevant matters and/or G omitted to take into account relevant matters. G H H 77. There is no discernible difference between the parties on the law. I What is disputed is the way the judge applied the legal principles in his I analysis of and deliberation on the three-stage test. The bulk of the J J arguments addressed the question whether the disputed amendments K pertaining to the three additional employees, with new alleged breaches K committed by each of them and additional confidential information L L communicated by each of them to the BYD Parties, should be regarded as M introducing new causes of action for breach of confidence, which is the M primary claim of the Foxconn Parties. According to Mr Wong, SC, who N N appeared for the Foxconn Parties, the other claims (procuring breach of O contractual and fiduciary duties, conspiracy and dishonest assistance) are O merely “legal variants” of the primary claim. P P Q The legal principles Q R R 78. We will first go over the relevant law and mention some salient S legal principles. S T 79. Because of the doctrine of “relation back” in section 35(1), the T U disputed amendments would have the effect of depriving the BYD Parties of U V V A - 34 - A B a prima facie defence of limitation, held by the judge to be reasonably B arguable in Stage 1 of the test, for which there is no cross-appeal by the C C Foxconn Parties. D D 80. If new facts pleaded in the amendment involve “the addition or E substitution of a new cause of action”, this is a “new claim” as stipulated in E section 35(2)(a). Section 35(5) provides that a new claim under F F section 35(2)(a) is only allowed to be made in the course of any action after G the expiry of any time limit if the conditions specified in Order 20 rule 5(5) G and section 35(6)(a) are satisfied. This is a jurisdictional requirement H H (Beijing Tong Gang Da Sheng Trade Co Ltd v Allen & Overy (a firm) I (2016) 19 HKCFAR 705 at §35). I J J 81. For the definition of a “cause of action”, one has regard to K various dicta in the following cases: K L “ A cause of action is simply a factual situation the existence of L which entitles one person to obtain from the court a remedy against another person.” M (Letang v Cooper [1965] 1 QB 232 at 242 to 243) M N “ A cause of action is that combination of facts which gives rise to a N legal right.” (Berezovsky v Abramovich [2011] 1 WLR 2290 at §59) O O “ “Cause of action” has been held from the earliest time to mean every fact which is material to be proved to entitle the plaintiff to P succeed, every fact which the defendant would have a right to P traverse.” Q (Cooke v Gill (1873) LR 8 CP 107 at 116) Q “ Every fact which it would be necessary for the plaintiff to prove, R if traversed, in order to support his right to the judgment of the R Court. It does not comprise every piece of evidence which is necessary to prove each fact, but every fact which is necessary to S S be proved.” (Read v Brown (1888) 22 QBD 128 at 131) T T “ The language I used obviously means this: the plaintiff in order to make out a cause of action must assert certain facts which, if U traversed, he would be put to prove. … In former times, if he failed U V V A - 35 - A to assert any of those facts, his declaration was demurrable as B B shewing no cause of action.” (Coburn v Colledge [1897] 1 QB 702 at 706 to 707) C C 82. One should bear in mind that a cause of action in this context is D D “not so much the label attaching to a claimant’s claim (for example ‘breach E of statutory duty’ or ‘money paid under a mistake of law’)”, but it is the set E of facts which entitles the plaintiff to relief (Hoescht UK Ltd v Inland F F Revenue Commissioners [2004] STC 1486 at §24; Sorata Ltd v Gardex Ltd G [1984] RPC 317 at 326). “The assessment is objective and the G consideration must be of the substance of what is pleaded, rather than the H H form.” (ISP Consulting Engineers Ltd v Body Corporate 89408 [2017] I NZCA 160 at §22) I J J 83. As to how one should approach the question whether the K proposed amendment constitutes a new cause of action, Tomlinson LJ gave K useful guidance in Co-operative Group Ltd v Birse Developments Ltd (2013) L L 148 Con LR 264: M M “ [20] In the quest for what constitutes a ‘new’ cause of action, ie a cause of action different from that already asserted, it is the N essential factual allegations upon which the original and the N proposed new or different claims are reliant which must be O compared. Thus ‘[t]he pleading of unnecessary allegations or the O addition of further instances or better particulars do not amount to a distinct cause of action’: see Paragon Finance plc v Thakerar & P Co, Paragon Finance plc v Thimbleby & Co (a firm) [1999] 1 All P ER 400 at 405 per Millett LJ. ‘So in identifying a new cause of action the bare minimum of essential facts abstracted from the Q Q original pleading is to be compared with the minimum as it would be constituted under the amended pleading’: see per Robert R Walker LJ in Smith v Henniker-Major & Co [2002] EWCA Civ R 762 at [96], [2002] 2 BCLC 655 at [96], [2003] Ch 182. S [21] The court is therefore concerned with the comparison of S ‘the essential factual elements in a cause of action already pleaded with the essential factual elements in the cause of action as T T proposed’: see per David Richards J in Revenue and Customs Comrs v Begum [2010] EWHC 1799 (Ch) at [32], [2011] BPIR 59 U at [32]. ‘A change in the essential features of the factual basis U V V A - 36 - A (rather than, say, giving further particulars of existing allegations) B B will introduce a new cause of action’: [2011] BPIR 59 at [30]. C [22] Where an amendment pleads a duty which differs from that C pleaded in the original action, it will usually assert a new cause of action: see per Sir Iain Glidewell in Darlington Building Society v D O’Rourke James Scourfield & McCarthy [1999] PNLR 365 at 370. D However as Sir Iain went on to observe, where different facts are E alleged to constitute a breach of an already pleaded duty, the courts E have had more difficulty in deciding whether a new cause of action is pleaded. … In the former case [Steamship Mutual Underwriting F Association Ltd v Trollope & Colls Ltd (1986) 6 Con LR 11] May F LJ offered the guidance that one must look not only to the duty, but also to the nature and extent of the breach relied upon, as well G G as to the nature and extent of the damage complained of in deciding whether, as a matter of degree, a new cause of action is sought to H be relied upon. The question to be resolved is therefore one of fact H and degree. For my part I am not convinced that one needs to look further than for a change in the essential features of the factual I basis relied upon, bearing in mind that the factual basis will include I the facts out of which the duty is to be spelled as well as those J which allegedly give rise to breach and damage. …” J K 84. In PJSC Tatneft v Bogolyubov [2017] 1 All ER (Comm) 833, K after quoting the above extracts in Co-operative Group Ltd v Birse L L Developments Ltd, Picken J summed up the position in this way in §92: M M “ Accordingly, in order to determine whether a proposed amended claim is a new claim involves comparing ‘the essential factual N elements in a cause of action already pleaded with the essential N factual elements in the cause of action as proposed’. The amendment will introduce a new cause of action if there is a O ‘change in the essential features of the factual basis’ relied upon. O This will include consideration of whether the amendment P introduces a duty which was not previously pleaded, or relies on a P new distinct act said to have caused a loss at a different time from the loss originally pleaded. …” Q Q 85. As for the “essential factual elements” for the cause of action of R R breach of confidence, there are these three requirements for liability: (1) the S information has the necessary quality of confidence about it; (2) that S information has been imparted in circumstances importing an obligation of T T confidence; and (3) unauthorized use or disclosure of that information to the U U V V A - 37 - A B detriment of the plaintiff (University of Hong Kong v Hong Kong B Commercial Broadcasting Co Ltd [2016] 1 HKLRD 536 at §38; Clerk & C C Lindsell on Torts (22nd ed) at §27-06). D D 86. Lastly, as to how the Stage 3 test (“arising out of the same or E substantially the same facts”) should be approached, the relevant E propositions have been summarized in Diamandis v Wills [2015] EWHC 312 F F (Ch) at §49: G G “ (1) “Same or substantially the same” is not synonymous with “similar”. H H (2) Whilst in borderline cases, the answer to this question is or I may be substantially a “matter of impression”, in others, it I must be a question of analysis: Ballinger v Mercer Ltd [2014] 1 WLR 3597 at §§35 and 36. J J (3) The purpose of the requirement at Stage 3 is to avoid placing the defendant in a position where he will be obliged, after the K K expiration of the limitation period, to investigate facts and obtain evidence of matters completely outside the ambit of L and unrelated to the facts which he could reasonably be L assumed to have investigated for the purpose of defending the unamended claim. M M (4) It is thus necessary to consider the extent to which the defendants would be required to embark upon an N N investigation of facts which they would not have been concerned to investigate: Ballinger §38. At Stage 3 the court O is concerned at a much less abstract level than Stage 2; it is a O matter of considering the whole range of facts which are likely to be adduced at trial: Finlan v Eyton Morris Winfield [2007] P P 4 All ER 143 at §§56 and 57 citing Smith v Henniker-Major at §96. Q Q (5) Finally, in considering what the relevant facts are in the original pleading a material consideration are the factual R matters raised in the defence: see Berezovsky v Abramovich R §73 and Goode v Martin [2002] 1 WLR 1828 where the Court of Appeal interpreted CPR 17.4(2)13 so as to produce a just S S result where an amendment involved the introduction of no new facts. There the facts in question had been raised in the T defence, though not in the original statement of claim.” T U 13 Equivalent to Rules of the High Court Order 20 rule 5(5) U V V A - 38 - A B Comparing the essential factual elements – breach of confidence B C 87. We turn to the exercise of comparing the essential factual C elements of the claim of breach of confidence as pleaded in RASoC with the D D disputed amendments to see if there is a change in the essential features of E the factual basis relied upon for this cause of action. E F F 88. Mr Yu emphasized that notwithstanding the selection of G material facts to constitute a cause of action for this purpose is made at “the G highest level of abstraction” (Paragon Finance plc v Thakerar & Co at 405g), H H “the abstraction cannot go to a point where the facts relied on by the plaintiff I are so abstract that an essential factual element of the cause of action has not I been identified.” (Body Corporate 360683 & Anr v Auckland Council & Ors J J [2017] NZHC 1785 at §11) In his written submissions, he submitted that K the judge’s finding that the amendments involve “the same factual case” is K clearly incorrect and without basis for these reasons14: L L (1) The facts pleaded in RASoC relate exclusively to the original M M nine employees, which are separate and distinct from the new N factual matters raised in the amendments relating to the three N additional employees. The amendments in relation to the O O three additional employees are not “further instances” or P “further and better particulars” of the alleged wrongdoings P under the existing claim. Rather, the amendments amount to Q Q the introduction of new “factual situations” pertaining to each R of the three additional employees, the existence of which R entitles the Foxconn Parties to obtain from the court a remedy S S T T 14 Similar submissions were made before the judge by the former counsel of the BYD Parties, see U judgment §§35, 36 U V V A - 39 - A B against the BYD Parties and therefore constitute new causes of B action. C C (2) The amendments alleged for the first time that the BYD Parties D D induced or procured breaches of duties by each of the E three additional employees, which differ from the instances of E inducement or procurement of the original nine employees. F F The three additional employees are also alleged to have G breached different duties arising from their respective G employment relationship with the Foxconn Parties. H H (3) The items of confidential information allegedly received by the I I BYD Parties from the three additional employees are different. J The confidential information pleaded in RASoC was identified J by the schedules to the pleading. The disputed amendments K K added Schedules 13A, 13B and 13C to the pleading as new L items of confidential information. L M (4) The circumstances in which such confidential information was M allegedly received are also different from those alleged in N N respect of the original nine employees. New factual situations O were introduced as to how the additional confidential O information was imparted to the defendants. P P Q 89. In the oral submissions of Mr Yu, he no longer contended that Q the alleged inducement or procurement of the three additional employees is R R a material fact in respect of the cause of action of breach of confidence, S recognizing that inducement or procurement of the employees does not S feature in the three essential factual elements to found liability for this cause T T of action (University of Hong Kong v Hong Kong Commercial Broadcasting U Co Ltd at §38), and it is now well established it is no longer necessary to U V V A - 40 - A B identify a prior confidential relationship before a duty of confidence can arise B (Sim Kon Fah v JBPB & Co [2011] 4 HKLRD 45 at §41 and the cases there C C cited). Mr Yu argued instead that the claim of breach of confidence should D not be set apart from the other claims of inducing breach of contractual and D fiduciary duties, conspiracy and dishonest assistance, as all the claims are E E interlinked. As it cannot be disputed that the disputed amendments would F introduce new causes of action for the other claims, it would be inconsistent F to find that they do not introduce a new cause of action for the breach of G G confidence claim. He further submitted that for the three essential factual H elements to found liability for breach of confidence, additional facets are H brought in by the disputed amendments involving new confidential I I information and new circumstances in which such additional information J was received. These additional facets to the three essential factual elements J must give rise to a new cause of action. K K L 90. We are not persuaded by Mr Yu. We are inclined to agree with L Mr Wong that the disputed amendments do not constitute a new cause of M M action for the claim of breach of confidence. As a number of cases have N repeatedly emphasized 15 , it is a question of fact and degree whether the N change in an amended pleading has an essentially different character from O O the earlier pleading. We are satisfied in this instance the disputed P amendments clearly do not bring about a change in the essential features of P the factual basis for the claim of breach of confidence. Q Q 91. First of all, one must have regard to the broader picture in order R R to consider the disputed amendments in the whole context of the plaintiffs’ S pleaded case in RASoC. Contrary to Mr Yu’s submission, the plaintiffs’ S T 15 Secretary of State for Transport v Pell Frischmann Consultants Ltd [2006] EWHC 2909 (TCC) at §38; T Co-operative Group Ltd v Birse Developments Ltd at §22; Smith v Wilkins & Davies Construction Co Ltd [1958] NZLR 958 (SC) at 961; Transpower New Zealand Ltd v Todd Energy Ltd [2007] NZCA 302 U at §61; ISP Consulting Engineers Ltd v Body Corporate 89408 at §24 U V V A - 41 - A B pleaded case is not confined to the original nine employees. The breach of B confidence claim made against the BYD Parties (not against any individual C C former employees) is that the defendants breached their duty of confidence D by wrongfully receiving and using the plaintiffs’ confidential information, D being trade secrets including operation manuals, records of suppliers and E E customers, organization charts, customers requisition documents, strategy F documents and financial and production statistics, and this was done to F enable the defendants to set up a production line in mobile handsets highly G G similar to the plaintiffs’ production system. It was alleged that the H defendants devised a scheme in 2005 to recruit the plaintiffs’ officers and H employees for this purpose. I I J 92. Two former employees, Jun and Si, were allegedly recruited as J the prime movers. They disclosed confidential information to the K K defendants and procured and induced other employees to do likewise. In L RASoC, there were nine named employees who had allegedly disclosed L confidential information , and particulars of what they allegedly did were 16 M M pleaded17. N N 93. In 2006, the Foxconn Technology Group employed a total of O about 500,000 individuals worldwide and had over 23,000 system O documents relating to the manufacture of handset modules and components P P and provision of handset assembly services. As the plaintiffs have deposed, Q it is practically impossible for them to compare all the defendants’ documents Q against all the plaintiffs’ confidential information to identify which of the R R defendants’ documents were prepared with reference to the plaintiffs’ S confidential information and they can only investigate a particular employee S T T 16 §16 and Particulars §§(1) to (9), they were referred to collectively as the “Employees” U 17 §§20 to 26C and Schedules 1 to 13 U V V A - 42 - A B if there is some indication that this individual was involved in the B misappropriation of the confidential information . 18 C C 94. In RASoC, it was expressly pleaded that until after discovery D D and/or interrogatories, the plaintiffs are unable to state or particularise the E full extent of the amount of the confidential information disclosed to the E defendants and reserve their right to add to or supplement the schedules F F thereto . They are unable to give further particulars that the defendants 19 G received the information with the requisite knowledge20 or the full extent of G the defendants’ breach of confidence21, until after completion of discovery H H and/or interrogatories. Mr Yu submitted this showed a lot of gaps on the I plaintiffs’ own pleaded case. We are inclined to think gaps of this nature I J are to be expected given the circumstances as alleged, and it is J understandable that the plaintiffs would make such a reservation pending K K completion of discovery in their pleading, as they cannot be certain how L much confidential information was imparted through Jun and Si. To read L RASoC as being confined to the nine original employees and the confidential M M information in Schedules 1 to 13 is plainly not a fair reading. Nor do we N think it realistic to view the pleading of the nine original employees and the N confidential information in Schedules 1 to 13 as exhaustive of the plaintiffs’ O O case in the breach of confidence claim. Given the whole context of the P plaintiffs’ case, it would not be reasonable to suppose that this claim is to be P limited to the confidential information in Schedules 1 to 13 that the plaintiffs Q Q had been able to trace to the disclosure by the nine original employees prior R to the BYD Discovery. R S S 18 2nd affirmation of Xiong Yong-ai filed on 2 February 2016, §§2.3, 2.4 T 19 §27 and (a) Particulars of receipt by the Defendants §(3) T 20 §27 and (b) Particulars of knowledge of the Defendants §(4) U 21 §29 and Particulars §(2) U V V A - 43 - A B 95. Mr Wong rightly observed that before the defendants opposed B this amendment application, the defendants had not proceeded on the basis C C that the plaintiffs’ entire claim for breach of confidence is confined to the D documents disclosed to the defendants through the nine original employees. D In the BYD Discovery, the defendants saw fit to disclose documents relevant E E to the allegation that the defendants’ documents were modified from or bear F striking similarity with the plaintiffs’ documents and used in the defendants’ F production line 22 , which are not referable to any of the nine original G G employees and not set out in Schedules 1 to 13. It was the BYD Discovery, H which disclosed eight defendants’ documents signed and approved by Dong, H that caused the plaintiffs to investigate and discover that nine Foxconn I I documents were disclosed by Dong and copied or modified by the J defendants, and this led to the present application to amend RASoC. J K K 96. We agree with the analysis of Mr Wong that on a comparison of L RASoC with the disputed amendments, there is no real difference in the three L essential factual elements required to found liability for this claim. M M 97. In respect of the first essential element (that the information has N N the necessary quality of confidence about it), plainly the disputed O amendments do not seek to plead completely different kinds of confidential O information or make a change in the essential features of the factual basis. P P It is pertinent to note that only 14 documents (in Schedules 13A to 13C), of Q the same nature of the confidential information pleaded in RASoC, referable Q to the three additional employees (Dong, Chen Quan and Akin Wang) are R R added, compared with 205 other documents unrelated to the three additional S employees added to the existing schedules by way of further and better S T particulars. T U 22 RASoC §27 and (a) Particulars §(2) U V V A - 44 - A B 98. As for the third essential element (the defendants’ unauthorized B use of the confidential information in breach of their duty of confidence), C C again no real difference is brought about by the disputed amendments by D adding 14 items of confidential information. As submitted by Mr Wong, it D is the same duty, same breach and the same loss. Most of the documents in E E Schedule 13A (documents wrongfully disclosed by Dong) were included in F the second column of Schedule 14 (documents wrongfully modified or F copied by the defendants). As for Schedules 13B and 13C (emails G G disclosed by Chen Quan and Akin Wong respectively to the defendants H through Jun and Si), only four emails were added by these two schedules. H It should be noted that confidential information disclosed by other original I I employees were also received by the defendants through Jun and Si 23. The J disputed amendments plainly relate to further instances of the defendants’ J breach of confidence as pleaded, namely, making use of information the K K receipt of which was traced through the plaintiffs’ named employees or L which was not so traceable but bore striking similarity to the plaintiffs’ L documents. M M N 99. We turn to consider the second essential element (the N circumstances in which the information was imparted and by which a duty O O of confidence was imported). Such circumstances can arise even when the P confidential information was not obtained through any violation of P confidential relationship on the part of the recipient. The law imposes a Q Q duty of confidence whenever a person receives information he knows or R ought to know is fairly and reasonably to be regarded as confidential, such R that the recipient’s conscience is affected in a way which should be S S recognized by equity (Campbell v MGN Ltd [2004] 2 AC 457 at §§14, 47 to T 48, 85, 134; Vestergaard Frandsen A/S v Bestnet Europe Ltd [2013] UKSC T U 23 RASoC §§24 to 26C and Schedules 8 to 13 U V V A - 45 - A B 31 at §25). Whether a person has notice is to be objectively assessed by B reference to a reasonable person standing in the position of the recipient C C (Primary Group (UK) Ltd v The Royal Bank of Scotland plc [2014] RPC 26 D at §223). D E 100. Thus, the allegation that the defendants procured or induced the E breach of contract of the plaintiffs’ former employees is not an essential F F factual element of the breach of confidence claim. The absence of this G allegation does not render the claim demurrable, although its presence G strengthens the plaintiffs’ case and provides grounds for additional or H H alternative causes of action, such as inducing breach of contractual and I fiduciary duties. We see no reason why the breach of confidence claim I J should not be considered separately from the other claims for the purpose of J this exercise. And as different considerations apply in respect of the K K essential factual elements for different causes of action, there is no L inconsistency in finding that the disputed amendments do not introduce a L new cause of action for the breach of confidence claim, notwithstanding that M M an opposite conclusion may be reached for additional or alternative claims N in the action. N O 101. Making the comparison on the basis of a selection of material O facts at “the highest level of abstraction”, it is not necessary to include the P P precise means, manner or routes in which the confidential information came Q to be received by the defendants, or the defendants’ knowledge as to the Q precise means, manner or routes. It suffices that, when the defendants R R obtained information which they did use, a reasonable person in the S defendants’ position would have appreciated it was confidential, wherever it S T came from. T U U V V A - 46 - A B 102. In respect of the particulars of receipt of confidential B information pleaded in RASoC, it is stated that : 24 C C “ Further, the Plaintiffs rely on the fact that by about August 2006, D the 1st, 2nd and 7th Defendants had established a production line D which was highly similar to the production system of the Plaintiffs and had since August 2006 at the latest been using at least those E forms and tables set out in the first column of Schedule 14 hereto E which bear striking similarity to the operation documents developed by the Foxconn Technology Group and used by the F F Plaintiffs as set out in the second column of Schedule 14 hereto which form part of the Operation Manuals and the Records of G Suppliers and Customers referred to in paragraphs 11(a) and (b) G above.” H H 103. Further, as pointed out by Mr Wong, in RASoC, of the I documents pleaded in the second column of Schedule 14, only 28 overlap I with Schedules 1 to 13 (pertaining to the nine original employees), J J 31 documents do not overlap with the existing schedules. This K demonstrates that the existing claims are not restricted to information K obtained through those nine employees. L L M 104. As to the particulars of knowledge pleaded in RASoC 25 , the M plaintiffs relied on inter alia, the inherently confidential nature of the N N information and the fact that such information was not available in the public O domain, the imputation of knowledge of former employees who became the O defendants’ senior officers, that the plaintiffs had already sued the defendants P P in Shenzhen in June 2006 for wrongful use of the plaintiffs’ confidential Q information, and that the defendants devised a scheme in 2005 to recruit the Q plaintiffs’ officers and employees to obtain confidential information. R R S S T T 24 §27 and (a) Particulars of receipt by the Defendants §(2) U 25 §27 and (b) Particulars of knowledge of the Defendants §§(1) to (3) and (5) U V V A - 47 - A B 105. For the defendants’ breach of the duty of confidence, RASoC B pleaded inter alia that 26 the defendants’ personnel modified documents C C forming part of the plaintiffs’ confidential information for the use of the D defendants as set out in Schedule 15, and that the defendants set up the highly D similar production line and used forms and tables strikingly similar to the E E plaintiffs’ documents. F F 106. To recap, as neatly put by Mr Wong, for the purpose of the G comparison, it is not essential to establish: (1) whether the obtaining of the G information involved any breach of contract of any former employees; H H (2) whether any of the breaches was procured or induced by the defendants; I (3) whether nine or twelve or more former employees were involved; or I J (4) whether the defendants knew of the precise means, manner or routes by J which the information came into their possession. The disputed K K amendments involving adding 14 items of confidential information referable L to the three additional employees can hardly be categorized as something L essentially different or as a new case varying substantially from RASoC. M M 107. We do not find it necessary to deal with the defendants’ other N N specific points of attack of the judgment in the amended notice of appeal. O O Comparing the essential factual elements – the other claims P P Q 108. The judge did not appear to have considered the other claims Q separately to determine if the disputed amendments would have the effect of R R introducing new causes of action for the other claims. S S T T U 26 §29 and Particulars §§(1) and (2) U V V A - 48 - A B 109. Regarding the claim of inducing breach of contractual and B fiduciary duties, there is no allegation in the disputed amendments that the C C defendants had procured Dong to wrongfully disclose confidential D information. Dong’s case is a further instance of receipt of information that D had been modified or copied by the defendants . The allegation that the 27 E E defendants had procured breach of contract of Dong was only in relation to F Dong leaving the plaintiffs’ employment28 and making use of and exploiting F the confidential information29, which are relied on as overt acts in support of G G a claim for conspiracy. Also, there is no allegation in respect of Dong for H the claim of dishonest assistance30. H I 110. For the same reasons as discussed above, we do not think the I J allegation of making use or exploiting confidential information in respect of J the three additional employees 31 as an overt act in support of the conspiracy K K claim would raise new essential factual elements. L L 111. We are satisfied and Mr Wong did not seek to contend otherwise M that the disputed amendments do raise new essential facts and hence a new M cause of action in respect of these other claims: inducing breach of N N contractual and fiduciary duties in respect of Chen Quan and Akin Wang 32; O conspiracy with the overt act of procuring employees to leave the plaintiffs’ O employment in respect of Dong and Chen Quan33, the overt act of procuring P P the disclosure of confidential information in respect of Chen Quan and Akin Q Q R 27 RASoC §27 and (a) Particulars §(2) R 28 Disputed amendments, §42(1) S 29 Disputed amendments, §42(3) S 30 Disputed amendments, §44 T 31 Disputed amendments, §42(3) T 32 Disputed amendments, §39, (a) Particulars §(3) and (b) Particulars §(1) U 33 Disputed amendments, §42(1) U V V A - 49 - A B Wang34; and dishonestly assisting the employees in breach of their fiduciary B duties in respect of Chen Quan and Akin Wang . 35 C C 112. Hence, for these other claims, it is necessary to go to Stage 3 of D D the test and consider whether the new causes of action arise out of the same E or substantially the same facts as are already in issue in RASoC. And that E is what the judge had done, albeit on the premise that the disputed F F amendments do have the effect of introducing new causes of action, contrary G to his ruling that they do not36. G H H Arising out of the same or substantially the same facts I I 113. For the Stage 3 test, the “highest level of abstraction” approach J J in Stage 2 does not apply. The proper approach is to consider the entire K range of facts which would have to be investigated at trial if the amendments K are to be allowed, even though many of them may not be essential to the L L establishment of the plaintiff’s cause of action (Finlan v Eyton Morris M Winfield at §57). The question here is what is the whole range of facts M which could reasonably be assumed to have been investigated for the N N purpose of defending the claims in RASoC. The objective is to avoid O obliging a defendant, after the expiry of the limitation period, to investigate O matters that are completely outside and unrelated to the facts which could P P reasonably be assumed to have been investigated for the purpose of Q defending the existing claim. Q R R S S T 34 Disputed amendments, §42(2) T 35 Disputed amendments, §§44, 45 and 46 U 36 Judgment, §§49, 63 U V V A - 50 - A B 114. Mr Yu submitted that the disputed amendments do not arise out B of the same or substantially the same facts as pleaded in RASoC for these C C reasons37: D D (1) The central fact must be the procurement or inducement alleged E against the defendants. The alleged procurement or E inducement in respect of Dong, Chen Quan and Akin Wang F F cannot be said to be the same or substantially the same as G regards the original nine employees. G H (2) If the new claims relating to the three additional employees are H to be allowed, the range of facts that will have to be investigated I I at trial would not be the same or substantially the same as the J facts that would have to be investigated with respect to the J claims pertaining to the original nine employees. K K (3) The allegations of inducement and procurement in respect of L L the three additional employees give rise to entirely new factual M matters which require investigation and it cannot be suggested M that the defendants would have anticipated that allegations N N would be made in respect of these individuals and would have O made investigations regarding them when investigating the O original pleas in RASoC. P P Q 115. We do not accept his submissions. Q R 116. For the reasons already given, the case in RASoC is not R confined to the procurement or inducement alleged in respect of the original S S nine employees. Further, we do not think the central fact must be the T T 37 Similar submissions were made in the court below by the former counsel of the BYD Parties, see U judgment §§51, 52 U V V A - 51 - A B procurement or inducement alleged against the defendants. The main B allegations in RASoC included: (1) the defendants wrongfully received the C C plaintiffs’ confidential information through the plaintiffs’ employees D including in particular Jun and Si, who were the prime movers; and (2) the D defendants wrongfully modified or copied the confidential information and E E established a production line strikingly similar to the plaintiffs’ system by F using such information. F G 117. The whole range of facts that the defendants would reasonably G be assumed to investigate for the purpose of defending the claims in RASoC H H should include: (1) the plaintiffs’ documents received by the defendants I through the plaintiffs’ employees, in particular Jun and Si; and (2) the I J plaintiffs’ documents such as those pleaded in the unamended Schedule 14, J which are alleged to have been modified or copied by the defendants or used K K in establishing the defendants’ own production line. The documents to be L investigated in (1) should include not only the documents pleaded in L RASoC , but all the other documents received by the defendants through 38 M M Jun and Si, including those documents mentioned in the disputed N amendments39. And the documents to be investigated in (2) should cover N the defendants’ documents which bore striking similarity to the plaintiffs’ O O documents, including those documents mentioned in the disputed P amendments40. P Q 118. As a matter of fact, the defendants did make some kind of Q investigation as postulated and had disclosed in the BYD Discovery further R R documents received by the defendants through Jun and Si being the S S T 38 §§21A to 26C, and Schedules 8 to 13 T 39 Schedules 13B and 13C U 40 Schedules 13A and 14 U V V A - 52 - A B four emails sent by Chen Quan and Akin Wang, when neither Chen Quan nor B Akin Wang was mentioned in RASoC. They also disclosed further C C documents which belonged to them and were signed and approved by Dong D as their staff, even though Dong was not among the original nine employees, D and this led to the discovery by the plaintiffs that these documents were E E modified or copied from the plaintiffs’ documents. F F 119. We agree with Mr Wong the facts that have to be investigated G for the purpose of defending the claims in RASoC and the facts to be G investigated to defend the new causes of action in the disputed amendments H H would substantially overlap, considering that the comparison for this purpose I is the whole range of facts which are likely to be adduced at the trial even I J though many of them may not be essential to the establishment of the J plaintiffs’ claims. We would uphold the judge on his rulings of the test in K K Stage 3. L L The exercise of discretion M M 120. Having come to the view that the jurisdictional requirements for N N allowing the amendments are satisfied, the judge considered whether he O should exercise his discretion in favour of allowing the amendments. He O reminded himself of the relevant principles governing amendments in P P general41. The defendants put forward two grounds why he should refuse Q leave to amend, delay and prejudice. The judge was not satisfied there were Q delaying tactics or that 14 months (from July 2014 when the plaintiffs had R R all the relevant documents to September 2015 when they came up with the S draft amendments) was an undue amount of time to formulate the S T T 41 Judgment, §§15, 64, 75, citing Hsu Ming Chi v Lam Shu Chit, HCCL 8/2013, 22 October 2014 at §§13 U to 18 U V V A - 53 - A B amendments, given the enormous scale of the discovery and the time needed B to complete the investigations . He was not persuaded that the defendants 42 C C will suffer significant prejudice if the amendments are allowed, having D considered the fading memory of witnesses, the difficulty in locating D relevant witnesses, and the abundance of contemporaneous documentary E E evidence43. He decided to exercise his discretion in favour of allowing the F amendments. F G 121. Mr Yu submitted the judge erred in finding that there has not G been delay of the plaintiffs and prejudice suffered by the defendants. He H H cited Hancock Shipping Co Ltd v Kawasaki Heavy Industries Ltd [1992] 1 I WLR 1025 at 1030C in support of his proposition that the burden is on the I J plaintiffs to satisfy the court it would be just in all the circumstances to allow J the amendments. He contended that the general principles concerning K K amendments do not apply where the grant of leave would deprive a defendant L of a limitation defence. L M 122. On the issue of delay, Mr Yu referred the court to the defendants’ M evidence alleging that the plaintiffs had a substantial number of the allegedly N N new documents (at least 50 out of 71 items) prior to July 2014 and the O plaintiffs’ evidence in response to the allegation. He submitted that the O judge did not appear to have considered the evidence and made no ruling on P P this in the judgment, so the finding there was no undue delay cannot be Q sustained. He also complained that the judge failed to take into account that Q the plaintiffs first informed the defendants of their wish to amend on 22 June R R 2015, that the plaintiffs had all along indicated that the proposed S S T T 42 Judgment, §67 U 43 Judgment, §§69 to 74 U V V A - 54 - A B amendments would be minimal, and that the proposed amendments were B only provided on 7 September 2015 and were much more extensive. C C 123. As for prejudice, Mr Yu repeated substantially the submissions D D made by the former counsel for the defendants. He further complained that E the judge failed to recognize the allegations against the BYD Parties that they E had induced or procured Chen Quan and Akin Wang to breach their duties to F F the Foxconn Parties are devoid of particulars, and that serious allegations of G dishonesty were made against the BYD Parties. He submitted that the G judge’s observation there is an abundance of contemporaneous documentary H H evidence is without proper basis, as there is no documentary evidence the I alleged breach of duty on the party of Dong, Chen Quan and Akin Wang was I J the result of inducement or procurement by the BYD Parties. J K 124. Under Order 20 rule 5(2), where an application for leave to K amend mentioned in rule 5(3), (4) or (5) is made after any relevant period of L L limitation current at the date of issue of the writ has expired, the court “may M nevertheless” grant such leave in the circumstances mentioned in that M paragraph “if it thinks it just to do so”. N N O 125. Hancock Shipping was such a case. It was common ground in O that case that the amendments would introduce new causes of action which P P would have been time-barred if raised in a new action on the date the Q application for amendment was made. The plaintiffs were able to establish Q the new cause of action arose out of the same facts or substantially the same R R facts as those supporting the existing claims and so came within Order 20 S rule 5(5). S T 126. The principles governing an amendment application in a case T U within Order 20 rule 5(2) are different from the governing principles in a U V V A - 55 - A B case of an ordinary amendment under Order 20 rule 5(1), in that respect we B would agree with Mr Yu. As Staughton LJ has stated in Hancock Shipping C C at 1029H to 1030B, when considering a case under rule 5(2), “the court may, D and indeed must, take into account that the defendant will, if leave is granted, D be deprived of an accrued defence”. Nevertheless, the court may grant E E leave to amend “if it thinks it just to do so”, “after taking into account F together with all other relevant factors”. Hence, “what justice requires F under [rule 5(2)] has to be decided in a different context from that which G G exists in the case of an ordinary amendment under [rule 5(1)].” H H 127. The judge applied the general principles concerning I amendments, treating this as a case of an ordinary amendment under I J rule 5(1). This is understandable as it was his conclusion that the disputed J amendments do not introduce a new cause of action for the breach of K K confidence claim and he did not consider if the effect on each of the other L claims is likewise. L M 128. We agree with the judge the disputed amendments do not raise M a new cause of action for the breach of confidence claim, which is the N N primary claim. For the amendments relating to the breach of confidence O claim, the judge was correct to apply the general principles concerning O amendments. P P Q 129. For other claims which we held to be new causes of action but Q arise out of the same or substantially the same facts as are already in issue in R R RASoC, the amendment application would be governed by the principles S applicable to cases within Order 20 rule 5(2). S T 130. Notwithstanding that the judge had not considered the T U amendment application for other claims in this light, we do not think this U V V A - 56 - A B would have a material impact such that we should interfere with the exercise B of his discretion. As stated in Hancock Shipping at 1030D to E, the C C applicant must undertake the task of establishing the factors which he relies D on as relevant, the opponent in turn may say there are other relevant factors D pointing in the other direction, and those are for the opponent to prove. In E E respect of the defendants’ contention they will suffer significant prejudice if F the amendments are allowed, it is for the defendants to establish that. F G 131. We see no valid basis to interfere with the judge’s conclusion G that the defendants had failed to establish real prejudice. We do not think H H it is right to treat this as a situation that the defendants were only first asked I to investigate the relevant matters in 2015. No evidence was adduced from I J Dong (who is still in the employment of the BYD Parties), Jun or Si (who J are among the defendants’ proposed witnesses) of any difficulty any of them K K might have in giving relevant evidence in response to the new allegations. L Nor is there evidence that any alleged prejudice in locating relevant L witnesses was caused by the delay in the action. M M 132. As for delay, this was an issue raised before the judge and dealt N N with in the judgment. The fact that the judge did not mention the evidence O adduced by the parties does not mean he has not taken the relevant evidence O into consideration. There is no basis to interfere with his finding that on P P the evidence he is not satisfied that 14 months are necessarily an undue Q amount of time to formulate the amendments. Q R R 133. It cannot be said that the judge’s exercise of discretion was S plainly wrong. Nor do we think the defendants have established any of the S well-established grounds for this court to interfere with the judge’s exercise T T of discretion. U U V V A - 57 - A B Disposition of CACV 76/2017 B C 134. We dismiss the appeal in CACV 76/2017. We make an order C nisi the defendants are to pay the plaintiffs’ costs of this appeal, with a D D certificate for three counsel. E E F F G G H H I (M H Lam) (Susan Kwan) (Aarif Barma) I Vice President Justice of Appeal Justice of Appeal J J K Mr Wong Yan Lung SC, Mr Law Man Chung and Mr Byron Chiu, instructed K by Mayer Brown JSM, for the plaintiffs (by original action) and the L defendants (by counterclaim) L Mr Benjamin Yu SC and Ms Sara Tong, instructed by Herbert Smith M Freehills, for the defendants (by original action) and the plaintiffs (by M counterclaim) N N O O P P Q Q R R S S T T U U V V