Fordadoor Ltd v. Wong Kwong Wing Alias Edward Wong and Others

HCA 671/2017

[2020] HKCFI 85

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

ACTION NO 671 OF 2017

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Before: Deputy High Court Judge William Wong SC in Chambers

Date of Hearing: 31 December 2019

Date of Decision: 31 December 2019

Date of Handing Down Reasons for Decision: 6 January 2020

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REASONS FOR DECISION

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1.This is the 1st Defendant’s appeal against the decision of Master Wong dated 15 April 2019. The Master dismissed the 1st Defendant’s application to strike out part of the Plaintiff’s Amended Reply and Defence to Counterclaim, namely,

(1) paragraphs 3(b), 4(b), 6(a), 7(e), 9(g) and 16(b);

(2) paragraphs 57(a) to 57(q) of the 1^st Schedule; and

(3) paragraphs 71(a) to 71(c) of the 2^nd Schedule.

2.Mr Chong for the 1st Defendant submitted that the key issue is whether the Plaintiff should be allowed to advance its case by relying on the 1st Defendant’s previous pleas which have not only since been abandoned by the 1st Defendant, but also that such abandonment have been endorsed and approved with the leave of Master Eliza Chang on 28 September 2018.

3.Mr Chong for the 1st Defendant further submitted that this is purely a matter of law and as such is suitable for determination in a striking out application.  Mr Chong relied on a number of legal principles.  First, it is submitted that once an amendment is made, the amendment takes effect from the date when the pleading was first filed (the “relation-back principle”).  (See Sneade v Wotherton Babytes and Lead Mining Co Ltd [1904]1 KB 295,per Lord Collins MR at p 297 and Melvin Waxman v Li Fei Yu & Others HCA 1973/2012, unreported, 23 August 2013, per To J at §29.)  I do not think there is any dispute on this legal principle.

4.Secondly, Mr Chong for the 1st Defendant submitted that once a pleading has been amended, what stood before the amendment is no longer material and cannot be relied upon.  I am of the view that it is correct that after the amendment, the previous pleas are no longer parts of the 1st Defendant’s pleaded case.  However, it does not mean that the other party cannot rely on the fact that the 1st Defendant had previously pleaded its case in a certain way.  The fact that a party in a proceedings had previously made certain statements and pleas is a matter of history.  It is up to any party to the proceedings to decide whether to rely on such historical facts to advance his or her pleaded case.  I do not see any valid objections to the same.

5.The Plaintiff is not relying on the previous pleas to apply for judgment on admissions.  The Plaintiff is simply pleading the fact that such admissions had been made previously.  This is very different from the case of Warner v Sampson & Another [1959] 1 QB 297 relied upon by Mr Chong. In that case, the previous denial of a landlord’s title was set up as a ground to suggest that by reason of the same the lease had already been forfeited.  In the present case, the Plaintiff is merely pleading that such admissions had previously been made and the same are to be taken into account by the trial judge.  I am of the view that the Plaintiff is perfectly entitled to do so.  The case Guess? Inc & Others v Lee Seck Mon & Others CACV 97/1988, unreported, 2 December 1988 is also very different.  In that case, the court was dealing with amended pleadings where no party sought to rely on previous admissions. 

6.Thirdly, Mr Chong for the Defendant submitted that once a party’s pleadings is amended, apart from prohibiting his opponent from responding to the former’s previous pleadings, both parties would be obliged,in compliance with the procedural law, to deal with the issues in the new pleadings but not the previous one.  The latter proposition is of course correct and there is no need for any party to respond to a party’s previous pleadings.  However, it does not mean that a party cannot rely on the fact that the other party has previously pleaded its case in a particular way to advance his or her case and/or to test the credibility of the other party’s case.  

7.Mr Tai for the Plaintiff submitted that the question is whether the statement of truth verifying the deleted factual averments in the 1st Defendant’s previous pleadings can be regarded as if it had never been made after amendment of pleadings.  In Man Lin Heung, the Administratrix of the Estate of Man Kwai Yin v 梁根林 & Others [2019] HKDC 544 (DCMP 1213/2014, unreported, 18 April 2019), HH Judge K W Wong at §§28 and 29 said:

“ 28. Although the issue(s) raised before amendment is/are superseded and the newly pleaded case takes effect from the date of the original document, there is nothing stopping the Plaintiffs from testing the Defendant’s credibility by referring to his own inconsistent pleaded cases in cross-examination. It has to be remembered further and better particulars (‘FBP’) are part of pleadings. After the CJR, they have to be verified by a statement of truth: see O.41A, r.4(1) of RDC. Accordingly the primary facts set out in the FBP originally filed with the Court on 10 April 2015 are still ‘material facts’ which have been duly verified by the Defendant despite the amendment filed with Court on 16 March 2017 (the same for the 2 Actions).

29. Paragraph 2 of the Practice Direction 19.3 expressly requires that if a document verified by a statement of truth is amended, the previous statement of truth in respect thereof shall NOT be deleted. The reason is obvious. Verified factual matters cannot be lightly brushed aside as if it had never been said/happened. The Court is fully entitled to draw adverse conclusion against the maker of these inconsistent statements in the absence of a satisfactory explanation. It is exactly the case here.” (original emphasis)

8.In the Court of Appeal, Lam VP at §19 said:

“ 19. The second ground of appeal refers to the testing of the 1st Defendant’s credibility by reference to the pleadings before as well as after amendments. The Judge succinctly and correctly addressed the same at [28] to [30] of the Decision of 18 April 2019. The submission of Mr Lam with reference to an amendment taking effect from date of writ (and the citation of cases on that principle) completely misses the point.”

9.The fact that previous averments of material facts were verified by a statement of truth strengthens the proposition that a party is entitled to rely on such previous averments of material facts to support his or her pleaded case. 

10.Mr Tai for the Plaintiff also submitted that the deleted factual averments are relevant to the issues to be determined in the present case. I do not propose to go into each and every paragraph of the factual averments save to say that it is not plain and obvious to this Court that they are irrelevant and should be struck out.  For example, the issue of ownership of the land is joined at §1(b) of the Amended Statement of Claim and §2 of the Re-Amended Defence.  Although Mr Chong for the 1st Defendant submitted that he now no longer relied on the doctrine of resulting trust,the Plaintiff is entitled to plead that the 1st Defendant once admitted that it has beneficial ownership of the land to advance its case.  This is despite the fact that such admission has, with leave of the court, been abandoned.  I do not think it is right to shut out the Plaintiff at this stage to rely on the 1st Defendant’s previous albeit withdrawn admissions.

11.Mr Tai for the Plaintiff also submitted that most of the deleted factual averments are not within the Plaintiff’s knowledge.  By referring to the deleted factual averments in the 1st Defendant’s previous pleadings,the Plaintiff is not only putting forward the facts stated therein to be issues at trial, but is also informing the 1st Defendant the basis for the Plaintiff to plead those facts.  Hence, the 1st Defendant is well-informed that he has to adduce evidence not only to deal with the facts stated therein, but also the circumstances he made the representation that these facts were true by signing the statement of truth in the 1st Defendant’s previous pleadings. Enabling the other side to know what evidence they ought to  prepare for trial is one of the essential functions of pleadings.  (See Hong Kong Civil Procedure 2020, Vol 1 at §18/19/4).  I agree.

12.The Plaintiff is asking the Court to find the deleted factual averments to be true at the trial.  By pleading the deleted factual averments,the Plaintiff is putting forward such facts to be issues to be determined at trial so that the 1st Defendant knows that this is the Plaintiff’s case which the 1st Defendant will have to meet and the 1st Defendant can properly address the same by way of pleadings, witness statements and/or evidence. In fact, the 1st Defendant averred the same to be material facts at one stage. The fact that the 1st Defendant might have to deal with the deleted factual averments by pleadings, discoveries, witness statements and/or evidence are simply necessary or inevitable procedural steps in our civil justice system.

13.Finally, Mr Chong for the 1st Defendant submitted that it would prejudice, embarrass and delay the fair trial of an action should a party introduce a plea that is  unnecessary or irrelevant.  That proposition cannot be faulted.  Mr Chong for the 1st Defendant referred this Court to thecase of Chow Sing Yuet Elton (trading under the name or style of Elton S Y Chow & Associates (a firm) v Carry Express Investment Ltd HCCT 18/2007,unreported, 4 November 2009 where Saunders J at §§18, 20 – 21 said:

“ 18. It is important that the pleader, in drafting either a statement of claim or a defence, remembers that all the facts which tend to prove the facts in issue will be relevant at the trial, but they are not necessarily ‘material facts’ for pleading purposes. It is no answer to a prolix document such as this amended defence to say that the facts pleaded are facts upon which the defendant will rely at trial.

…

20. In an action for breach of contract the material facts constitute the contract, and the facts relating to the particular breach. It is right that, following the decision in Investors Compensation Scheme Ltd v West Bromwich Building Society [1998] 1 WLR 896, HL, the court will, in constructing a contract,have regard to the surrounding circumstances, or the factual matrix, in which the contract was made. But it is not necessary to plead that factual matrix. The proper place for assertions as to the surrounding circumstances is in the witness statements.

21. If facts are pleaded in a statement of claim it will be necessary for the defendant to investigate those facts before determining whether or not he admits or denies those facts, and he must respond to the pleading.  Where facts which are not material to the claim, but are relevant at the trial, and are contained within a witness statement, the other side may elect not to respond in any particular way to those facts.  Of course, facts asserted in a witness statement may not be answered at the other parties peril,but unlike an allegation in a pleading that other party may make such an election.  If facts are pleaded there must be a proper response to the pleading.”

14.Mr Tai for the Plaintiff does not dispute the above propositions of law.  What he submits (and as set out comprehensively in his skeleton) is that the previous admissions are material facts not within the Plaintiff’s knowledge and are relevant to the issues to be determined at the trial.  I am of the view that it is not plain and obvious that the previous admissions are not relevant and thus would necessarily incur wasted expenses at this stage.  (See Liu Chun Kow Joe v Lee Sau Wing HCPI 399/2001, unreported,15 July 2005, at §6 per Deputy High Court Judge To (as he then was).

15.As a fallback, Mr Tai for the Plaintiff also relied on the case of Ma Toi Ling v Lam Man Kwong HCA 2208/2014, unreported, 5 January 2016 where Chow J at §25 said:

“ 25. In my view, the references to Madam Ngai in the draft re-amended statement of claim can, by and large, be justified on the basis that they set out the factual background relevant to the 1st plaintiff’s claim against the defendant. I accept that it may be possible to delete some of the references to, or pleas relating to Madam Ngai, in the draft re-amended statement of claim without affecting the completeness of the 1st plaintiff’s pleaded cause of action against the defendant, and that the draft re-amended statement of claim can be improved or shortened in some way. However, the court cannot insist on perfect pleadings in every case. Very often, parties include some non-essential facts or averments in their pleadings, and in many cases the pleadings would be allowed to stand, because it would not be realistic or practicable for the court to micro-examine every pleading and strike out those parts which are not strictly necessary for that pleading. It is, in every case, a question of fact and degree how the court should respond to a pleading which contains some unnecessary facts or averments. Assuming that the pleading does disclose a reasonable cause of action or defence, the important consideration is whether, looking at the pleading as a whole, it is scandalous, frivolous or vexatious, may prejudice, embarrass or delay the fair trial of the action, or is otherwise an abuse of the process of the court.” (emphasis added)

16.Bearing in mind the established legal principles in relation to striking out of pleadings under Order 18, rule 19, I am of the view that this is not a plain and obvious case for striking out. What the Plaintiff is doing is simply to introduce material averments of facts, namely, historical admissions by the 1st Defendant, which it considers to be relevant and necessary to support its case.

17.For all the reasons stated above, the 1^st Defendant’s appeal is dismissed.

18.I also make a costs order that the Plaintiff is to have the costs of and incidental to this appeal against the 1st Defendant forthwith and to be taxed, on a party to party basis, if not agreed with a certificate for one counsel.

19.Finally, it remains for me to thank Mr Tai for the Plaintiff and Mr K M Chong and Mr Alvin Chong for the 1st Defendant for their helpful assistance.

Mr Jonathan Kwan-hang Tai, instructed by Cheung, Chan & Co, for the plaintiff

Mr K M Chong and Mr Alvin Chong, instructed by Au, Thong & Tsang, for the 1^st defendant