Moo Young (Gloria) and Erle Moo Young v Geoffrey Chong, Dorothy Chong and Family Foods Ltd ((in Liquidation))

• Jurisdiction: Jamaica
• Judge: DOWNER, J.A. , HARRISON, J.A. , DOWNER, JA. , DOWNER: J.A.
• Judgment Date: 23 March 2000
• Neutral Citation: JM 2000 CA 16
• Judgment citation (vLex): [2000] 3 JJC 2301
• Court: Court of Appeal (Jamaica)
• Date: 23 March 2000

IN THE COURT OF APPEAL

BEFORE:

THE HON. MR. JUSTICE DOWNER, J.A THE HON. MR. JUSTICE HARRISON, J.A THE HON. MR. JUSTICE LANGRIN, J.A

BETWEEN:

GLORIA MOO YOUNG

1ST. PLAINTIFF/APPELLANT

ERLE MOO YOUNG

2ND PLAINTIFF/APPELLANT

AND

GEOFFREY CHONG

DEFENDANT/RESPONDENT

DOROTHY CHONG

DEFENDANT/RESPONDENT

FAMILY FOODS LIMITED (IN LIQUIDATION)

DEFENDANT/RESPONDENT

Donald Scharschmidt, Q.C., Andrew Rattray Miss Maliaca Wong ,

Michael Hylton, Q.C., Mrs. Michele Champaqnie

CIVIL PROCEDURE - Pleadings - Amendments granted during course of trial - Whether amendments amounted to new defence

DOWNER, J.A.

1 My brother Harrison, J.A., will deliver the first judgment.

HARRISON, J.A.

2 This is an interlocutory appeal from a decision of Ellis, J. made on 27th October, 1994 granting amendments to the defence on the application of the first and second respondents.

3 The history of this case is that the writ filed was dated 21st October, 1987 and the statement of claim dated 17th December, 1987 was filed thereafter. The respondents filed their defence on 15th December, 1994, a reply was filed on 13th April, 1995 and a rejoinder filed dated 20th April 1995. The trial of the action commenced in 1994 before Ellis, J. and continued in 1996, and during the year 1997. The evidence of several witnesses for the appellants was heard. The amendment was sought on 29th April, 1997, and after a hearing of the application on the 1st, 2nd, 6th and 9th day of May 1997, the application to amend the defence was granted by Ellis, J. on 8th October 1998.

4 The relevant facts are that the 1st and 2nd respondents are the majority shareholders in the third respondents, Family Foods Limited, a limited liability company which operated a supermarket in Ocho Rios, St. Ann. The 1st and 2nd appellants are the minority shareholders in the said company. All parties were directors and together comprised the board of directors. The 1st respondent is the managing director and chairman of the board. The said 1st and 2nd respondents managed and controlled the daily operation of the business of the 3rd respondent company. The appellants emigrated to the United States of America in 1977 and returned in 1982. The 1st and 2nd respondents themselves emigrated in 1979 but returned in 1980. During the entire period the latter retained effective control of the said business. The supermarket was destroyed by fire in June 1986. The appellants allege against the respondents, as minority shareholders, several acts of fraud, diversion of assets to themselves, unjust enrichment, improper use of the Company's funds and assets and breach of duty to the said Company, causing damage and loss to the said appellants. As a consequence the writ was filed.

5 The pleading relevant to this appeal is contained in the appellants' amended statement of claim, in paragraph 7, inter alia:

"7

• (1)a. During or around the year 1979 negotiations were conducted by the first and second Defendants or either of them acting with the knowledge and consent of the Plaintiffs for the purchase of property with a warehouse thereon situated at Ocho Rios. Saint Ann, being the property registered at Volume 1147 Folio 848 of the Register Book of Titles. It was agreed and understood by the Plaintiffs and the first and second Defendants that the property would be purchased by or on behalf of the third Defendant as beneficial owner thereof. The said property was duly purchased for the sum of $70.000.00 and the deposit therefor amounting to $7,000.00 was paid by the third Defendant with monies belonging to the third Defendant . The first and second Defendants in breach of their duty to the third Defendant and in fraud of the third Defendant and of the Plaintiffs caused the property to be registered in the name of the first Defendant thereby depriving the third Defendant of the legal ownership and of the rights and benefits as owner;

• (2) In March, 1980 the third Defendant bought certain lands situate at Ocho Rios (hereinafter called 'Pierre Chong Lands') which were registered at Volume 554 Folio 92 and Volume 652 Folio 31 of the Register Book of Titles. The Pierre Chong lands were sold in or around February, 1985 and the first and second Defendants acting for and on behalf of the third Defendant negotiated for and purchased lands known as Mansfield Property being part of the lands formerly registered at Volume 652 Folio 31 now registered at Volume 1201 Folio 466 of the Register Book of Titles. The purchase price of the Mansfield property was some $900,000.00 and part of the proceeds of sale of the Pierre Chong lands was applied in paying the sum of $34,050.00 and $100,950.00 towards the price of the Mansfield property. In fraud of the third Defendant and of the Plaintiffs and in breach of their duty to the third Defendant, the first and second Defendants secured that the Mansfield property be transferred to the second Defendant and registered in her name and carried out sundry manoeuvers to make it appear as if the Mansfield property was purchased by them for themselves and not by the third Defendant or on behalf of the third Defendant or by them as the Directors and/or agents and/or servants of the third Defendant for the Third Defendant."

6 In answer to these allegations, the respondents in their amended defence said, commencing at paragraph 24:

• "24. As to paragraph 7(1) and 7 (2) generally, the First and Second Defendants state that both the warehouse property referred to in paragraph 7(1) and the Pierre Chong lands referred to were the subject matter of negotiations to purchase generally at or about the same time. It was intended that Pierre Chong lands would be acquired or were being acquired by/or for the Third Defendant. The deposit in respect thereof was, however, paid by the Second Defendant from her own resources and not by the third Defendant.

  The warehouse land purchase was being effected by the Second Defendant in her personal capacity and on her own behalf and for her sole benefit and not by nor for the Third Defendant.

• 25. The deposit in respect thereof, to wit, the sum of Seven Thousand Dollars ($7,000.00) was paid by cheque drawn on the company's account which cheque was by way of re-imbursement in part of the deposit paid by the Second Defendant on the Pierre Chong lands which were being purchased for-by and in the name of the Third Defendant.

• 34. The first and Second Defendants state that the purchase of the Mansfield property was never made by the Third Defendant nor for and on behalf of the Third Defendant but that the said purchase was by the Second Defendant in her own right and the negotiations therefor conducted by her personally and for her own benefit and that the deposit for the purchase was provided by the Second Defendant out of the proceeds of sale of other lands owned solely by the Second Defendant. A small portion of the purchase price was obtained by a loan from the Third Defendant which loan was repaid by the Second Defendant one year later. More specifically, the Defendants deny that the Mansfield property was bought out of the proceeds of sale of Pierre Chong lands as alleged or at all."

7 The respondents were therefore maintaining, by their defence filed that:

• (1) the Pierre Chong lands were the property of the third respondent, due to the beneficence of the 1st and 2nd respondents;

• (2) the Warehouse property was solely owned by the second respondent, having been bought by the 2nd respondent, to the exclusion of the 1st respondent, and;

• (3) the Mansfield property was solely owned by the said 2nd respondent,

8 and that neither of the latter two properties was owned by nor bought with the funds of the third respondent.

9 After evidence in support of the statement of claim was heard, and particularly the evidence of Yvet Chang, a chartered accountant of the firm of Ernst and Young, Chartered accountants, the 1st and 2nd respondents sought and obtained the said amendments, the subject of this appeal.

10 Mr. Scharschmidt, Q.C., for the appellants, relied on and argued as his grounds of appeal, summarised, that:

• (1) the effect of the amendments granted would allow a new defence to be presented, distinctly different from that pleaded in May 1988 and pursued up to April 1997;

• (2) the application to amend was not made in good faith, but made to meet evidential differences faced by the Second Defendant, because of the evidence led by the appellants;

• (3) the need for the amendments must have been clear to the respondents previously.

• (4) the amendments did not arise as a result of a mistake or carelessness because the Second Respondent has asserted and sworn to specific facts.

• (5) & (6) the amendments rather than pleading material fact, raised arguments, asserted hypotheses and drew conclusions therefrom,

11 and the primary consideration was whether the application for amendment was made in good faith.

12 Mrs. Champagnie for the respondents submitted that the primary consideration is whether the amendment will serve the purpose of determining the true issues between the parties and may be made without injustice to the other side. Counsel argued that the evidence to be led by the respondent will be the same as originally intended, is contained in documents agreed and the amendments merely relate to the treatment of relevant accounts, namely the general ledger and financial statements of the Company, an issue not apparent on the appellants' pleadings. There was no prejudice to the appellants, and the amendments made would serve to bring the pleadings "in line with evidence."

13 Amendment to pleading, generally, may be made by a court at any stage of the trial for the purpose of bringing forward and determining the real question and issues in controversy between...