Coram: Hon Sir Derek Cons, V-P, Kempster and Clough, JJA
Date of Hearing: 20 June 1991
Date of Judgment: 20 June 1991
J U D G M E N T
1. This is an appeal from the reserved judgment and order of Mayo J given and made on 5 February 1991 setting aside an order which hadbeen made by Master Yam on 19 October 1990 for the addition of the trustee of the property of Soong Kim Sing, a bankrupt, as a defendantin this action in which Hong Leong Investment Co Ltd sue the Tai Ping Insurance Co Ltd for HK$1,710,800 pursuant to the terms ofa bond under seal dated 29 January 1986. By that bond the defendants (“the surety”) and the bankrupt, then carrying on business underthe style “Sam Yu Construction Company” (“the contractor”), were held firmly bound to Hong Leong Investment Co Ltd (“the employer”)and the Kwantung Provincial Bank (“the mortgagee”) in the sum just mentioned for the payment of which sum the contractor and suretybound themselves, their successors and assigns jointly and severally. The terms of the bond went on to read: –
2. The plaintiffs allege in their Re-Amended Statement of Claim that the bankrupt failed to complete the works in question as providedby the contract, that the defendants have failed to make good the damage suffered by the plaintiffs in consequence and that the defendantsare, therefore, liable to them in the amount stated in the bond.
3. Questions as to the appropriate parties to this litigation immediately arise. Under the terms of the bond the defendants and thebankrupt were jointly and severally liable to the plaintiffs and to the Kwantung Provincial Bank but their covenants were expressedto be made to the plaintiffs and to the bank jointly. RSC Order 15 rule 4(2) reads: –
In like circumstances to those now appearing proceedings may be stayed. Roche v Sherrington  1 WLR 599 at p 612. Perhaps I can leave the matter open, however, as no decision on the point is required for the purposes of this appeal.I might add that even if the liability of the defendants and of the bankrupt had been joint the plaintiffs and the bank would havebeen entitled to sue the defendants alone by reason of section 108 of the Bankruptcy Ordinance (Cap 6).
4. The principal matter of dispute in this interlocutory appeal arises from the fact that the defendants were not parties to the agreementof 30 January 1986 and, as is pleaded in paragraph 3(2) of the Reply, cannot themselves rely upon two critical clauses which it comprises:-
By “the bond” is meant the instrument dated 29 January 1986.
5. The defendants wish to allege that a certificate was issued by the architect on 18 March 1987 naming 26 January of that year as thedate of practical completion.
6. On 17 April 1990 the Official Receiver, in his capacity as trustee of the bankrupt’s property, issued a summons for leave to be addedas a defendant for the express purpose of counterclaiming a declaration that the defendants have been discharged from any obligationunder the bond and for an order dismissing or staying the plaintiffs’ claims against them. In granting leave Master Yam must haveaccepted some undertaking as to time under Order 15 rule 8(2) to (4) inclusive since his order made no provision for service of the amended writ on the trustee or for acknowledgment of such serviceprior to the filing of his Defence and Counterclaim on the following day; presumably effected before the writ had been amended.
7. The trustee’s application was made under Order 15 rule 6(1) and (2) which it may be helpful to set out. Paragraph (1) closely follows the terms of section 16(2) of the Supreme Court Ordinance(Cap 4): –
The powers thereby given are wide but before Mayo J it was contended, successfully, that they did not warrant the order made by theMaster as such order involved a breach of the terms of section 12(1) of the Bankruptcy Ordinance. By section 2 “Court” means “the High Court sitting in its bankruptcy jurisdiction”. Section 12(1) reads: –
In my opinion the Master’s order involved no breach of those provisions. It did not purport to grant the plaintiffs any remedy againstthe bankrupt’s person or property or to authorise them to commence an action or other proceedings claiming such relief. Only thecourt sitting in bankruptcy could, on one view of the matter, make such an order. As Order 15 rule 4(2), already quoted, makes explicit a party may be named as a defendant albeit no claim is made against him; a reluctant assignor ortrustee for example. That consideration apart, as the judge appears to have accepted, the propriety of the order joining the trusteeis supported by such authorities as Montgomery v Foy  2 QB 321; Shelling v John G. Shelling Ltd  1 QB 87 and Union Bank of the Middle East v Clapham “The Times” 20 July 1981. On the facts I do not read Norris v Beazley  2 CPD 80 as authority for a contrary view.
8. It would be unfortunate if the trustee, who is liable to be sued for contribution or indemnity by the defendants should they be heldliable to the plaintiffs, were constrained to issue separate proceedings followed, perhaps, by an application for consolidation ratherthan have all matters in dispute determined in these proceedings in accordance with the policy of the Supreme Court Ordinance andof the rules. Since the trustee is satisfied as to the terms and of the indemnity offered by the defendants and despite Mr Swaine’sarguments in a difficult case as far as the plaintiffs are concerned, I think it appropriate to exercise this court’s discretionboth to allow the appeal and, subject to any submission that may be made as to particular terms, restore the order made by the Masteron 19 October 1990 requiring the addition of the trustee as a defendant to the writ and allowing him to serve a Defence and Counterclaim.The argument based on delay cannot, in my view, prevail in the face of the timetable prepared for us.
Sir Derek Cons, V-P:
9. I agree with my Lord that the appeal should be allowed. In my judgment there was no infringement of section 12 of the Bankruptcy Ordinance as the judge below concluded. The reality of the situation is that it is the trustee who is commencing the proceedings and I seeno derogation from that situation in the mere fact that now for tecnnical reasons the plaintiff will be compelled to amend and servehis writ upon the trustee. In the exercise of my own discretion, I have no hesitation in agreeing with my Lord that the trustee shouldbe joined. I appreciate that there may be some delay and inconvenience but these are certainly not outweighed by the desirabilityof avoiding further action by the trustee which I am not satisfied must necessarily fail. With all respect to Mr Swaine’s submissionI do not think the trustee is acting in any way improperly in asking to be joined in these proceedings. If in due course any conflictof interest should arise no doubt it will be dealt with as it should.
10. I agree with all that has been said by my Lords and there is nothing I can usefully add.
J. Swaine, Jr (M/s John Ho & Tsui) for Plaintiff/Respondent
Mohan Bharwaney (M/s Tsang, Chan & Wong) for Appellant