Let’s Go Production Ltd v. Gold Rich Development Ltd
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DCCJ 506/2025 [2026] HKDC 1898 IN THE DISTRICT COURT OF THE HONG KONG SPECIAL ADMINISTRATIVE REGION CIVIL ACTION NO 506 OF 2025 ---------------------------------------
(by original action)
(by counterclaim) ---------------------------------------
------------------------ DECISION ------------------------ A. Introduction 1.There are three applications before this Court:
B. Procedural History 2.Let’s Go commenced these proceedings on 23 January 2025. 3.Gold Rich filed its Defence and Counterclaim on 28 April 2025, to which Nichole Tong filed an acknowledgement of service indicating her intention to contest the proceedings on 22 May 2025. 4.Let’s Go obtained leave to amend its Writ on 4 August 2025, and Gold Rich subsequently filed an Amended Defence and Counterclaim on 29 August 2025. 5.Following a consent summons, the Unless Order was made extending the time for Let’s Go and Nichole Tong to file their Reply and Defence to Counterclaim by 4 November 2025. The Reply and Defence to Counterclaim was filed on that date. 6.On 13 February 2026, Gold Rich filed a timetabling questionnaire, and on 24 February 2026, it made a request for further and better particulars of the Amended Statement of Claim and Reply and Defence to Counterclaim. 7.On 19 March 2026, Gold Rich entered the Default Judgment against Nichole Tong, who then issued a summons to set it aside on 25 March 2026 (the “Setting Aside Application”). 8.On 15 April 2026, Let’s Go and Nichole Tong took out the Amendment Application. 9.On 9 July 2026, Master Melinda Chiang set aside the Default Judgment. In paragraph 2 of Master Chiang’s Order, the learned Master ordered that costs of the Setting Aside Application up to 31 March 2026 be to Gold Rich, and thereafter costs be in the cause. 10.On 13 July 2026, Nichole Tong took out the Relief Application. 11.On 16 July 2026, Gold Rich filed a notice of appeal to appeal against Master Chiang’s Order. C. Background and Parties’ Respective Cases 12.The dispute arises from a written agreement entered into by Let’s Go to rent a stall space, J18 (“J18”), at a market in Citywalk, Tsuen Wan (the “Market”) from Gold Rich to operate a Japanese rice ball food and beverage (F&B) business. 13.Let’s Go alleges Gold Rich, through its representative, made fraudulent, reckless, or negligent misrepresentations to induce Let’s Go to enter the agreement. These representations included that J18 was an individual stall space, refurbishment would cost HK$400,000 to HK$600,000, all stalls were immediately usable and fire-safety approved, and the Market was and would remain Japanese-themed with a 90% F&B occupancy. 14.Let’s Go claims J18 was registered with the Buildings Department as a single combined unit (J01-J44), making it impossible to install a legally required individual fire shutter or obtain individual fire-safety approval. Let’s Go also alleges the dividing walls lacked required one-hour fire resistance, the drainage system was faulty, and the Market contained non-Japanese and non-F&B businesses (such as a playroom and Taiwanese teashop). 15.Let’s Go also alleges Gold Rich breached implied terms that J18 would be a standalone space capable of legally running F&B operations without running the rest of the Market in unison, and that J18 would have or could apply for its own fire safety certificate. 16.Let’s Go rescinded the agreement in November 2023 and claims a declaration that it has validly rescinded the agreement, damages for misrepresentation and deceit, and around HK$1.7 million for wasted expenditures, including salaries, rent, and refurbishment costs. 17.Gold Rich denies the misrepresentations and asserts that Let’s Go was provided with an Investment Proposal and Table of Stall Spaces showing the Market’s true composition, including non-F&B and unoccupied stalls. 18.Gold Rich asserts that vacant possession of J18 was delivered “as is” without internal walls or a fire shutter, and the agreement expressly required the Plaintiff to obtain all necessary licenses and comply with statutory fire-safety rules at its own expense. Gold Rich claims its dividing walls had four-hour fire resistance. 19.In the premises, Let’s Go wrongfully vacated J18 without reinstating the premises in November 2023, constituting a repudiatory breach of the agreement, which the Let’s Go formally accepted. 20.Gold Rich counterclaims against Let’s Go and Nichole Tong, who signed a guarantee for the Plaintiff’s contractual obligations, seeking a declaration that it is entitled to terminate the agreement, forfeiture of deposits, and around HK$1.4 million in damages for unpaid rent, rates, utility charges, and reinstatement costs. D. Applicable Legal Principles D1. Setting aside of default judgment 21.The principles governing the setting aside of a default judgment are well-established. An irregularly obtained default judgment will be set aside as of right, without regard to the merits of the proposed defence. 22.However, if the judgment is regular, the Court exercises an unconditional discretionary power to set it aside to avoid injustice. In exercising this discretion, the primary consideration is whether the defendant can demonstrate a sufficiently meritorious defence that has a real prospect of success, supported by potentially credible evidence. The merits threshold is higher than that required to resist an Order 14 summary judgment application: see eg Alan Chung Wah Tang & Kan Lap Kee (Joint and Several Liquidators of Wan Hin and Company Limited (in liquidation) v Chung Chun Keung ors (unrep, HCA 64/2020, 17 February 2021), §§28-29. 23.The Court must also weigh other relevant factors against the merits of the case, including the defendant’s explanation for the default, post-service conduct, delay, and any prejudice that would be caused to the plaintiff or third parties. In assessing the merits, the Court is limited to considering the admissible evidence placed before it for the purpose of the summons: see Brantner Transports Slovakia, S R O v Kyomura Electronics (H K) Ltd & ors [2025] HKCFI 2301, §§18, 46. D2. Relief from sanctions 24.The principles applicable to the Relief Application are summarised in Chan Chung Sing v Chan Andy Yuan & anor [2024] HKCFI 536, §§27-35:
E. Preliminary Arguments 25.The parties made three preliminary arguments which should be dealt with first. 26.First, Gold Rich argues that Nichole Tong has abandoned any reliance on Order 2, rule 1(2) of the Rules of the District Court (Cap 336H). However, first, it is trite that the Appeal should be considered de novo. Secondly, Nichole Tong’s summons for the Setting Aside Application explicitly relies upon Order 2, rule 2, rather than Order 2, rule 1(2). In the circumstances, any abandonment of any reliance on Order 2, rule 1(2) is neither here nor there. 27.Secondly, Gold Rich contends that the Setting Aside Application failed to comply with Order 2, rule 2(b) because it did not state the grounds of objection. However, Nichole Tong’s summons concurrently relies on Order 19, rule 9. Order 19, rule 9 confers a broad discretion upon the Court to set aside a judgment in default on such terms as it thinks just, and it does not mandate that the grounds of objection be explicitly stated in the summons. Thus, the Court is fully empowered to deal with Nichole Tong’s application to set aside the Default Judgment. 28.Thirdly, it was suggested that Gold Rich failed to serve a notice of intention to enter default judgment as required by Order 19, rule 8A. But Nichole Tong’s counsel confirms at the hearing that she no longer takes this point. 29.In any event, this case falls within the exception provided in Order 19, rule 8A(2)(a). Because there was a Court order extending the time for Nichole Tong to file her defence to counterclaim, i.e. the Unless Order, the notice requirement was displaced. F. The Appeal F1. Regular or irregular judgment? 30.The first issue is whether the Default Judgment was regular. 31.Nichole Tong asserts that the Reply and Defence to Counterclaim was implicitly intended to serve as a defence for both Let’s Go and herself, characterising the omission of her name in the endorsement as a mere clerical error. 32.Gold Rich counters that:
33.I agree. Reading the Reply and Defence to Counterclaim as a whole, a reasonable reader would understand and have an impression that the Reply and Defence to Counterclaim was filed on behalf of Let’s Go only. 34.The facts of this case are distinguishable from those in Crouch v Any Marketing Ltd (UKEAT/0031/11LA, 24 February 2011) cited by Nichole Tong. For the reasons set out in paragraph 32 above, I do not think that the intention of the Reply and Defence to Counterclaim is sufficiently implicit that it was filed on behalf of both Let’s Go and Nichole Tong. 35.A pleading that is not formally endorsed and put forward on behalf of a specific party cannot be deemed to have been filed by that party. The belated attempt to file a separate statement of truth in Nichole Tong’s personal capacity cannot turn a pleading that was not filed on behalf of Nichole Tong into one that is so filed. 36.For the reasons above, I find that Nichole Tong defaulted in the service of her defence to the counterclaim, and consequently, the Default Judgment entered by Gold Rich was regular. F2. Waiver or estoppel? 37.The second issue is whether Gold Rich has waived its right to enter default judgment or is estopped from doing so. 38.Nichole Tong argues that Gold Rich’s conduct amounted to an election to proceed to trial against both parties. Such conduct includes applying for further and better particulars in respect of the Amended Statement of Claim and the Reply and Defence to Counterclaim, participating in the case management summons, taking issue with the correctness of the answers provided by Let’s Go and Nichole Tong in their timetabling questionnaire, and seeking directions in the timetabling questionnaire for the parties to file and serve their respective lists of documents and exchange their witness statements. 39.However, none of the above conduct constitutes any unequivocal representation by Gold Rich that it will forgo its right to enter interlocutory judgment against Nichole Tong upon which a waiver or estoppel may by founded. 40.First, in Gold Rich’s timetabling questionnaire, it specifically states that Nichole Tong did not file any defence to counterclaim, and so there can be no dispute as to her liability on Gold Rich’s claim based on the guarantee. Any step taken by Gold Rich must be understood against such position taken by Gold Rich. 41.In the circumstances, when Gold Rich sought directions for the parties to file and serve their respective lists of documents and exchange their witness statements, it could not have been Gold Rich’s intention to allow Nichole Tong to dispute her liability under the guarantee. 42.Secondly, Order 19, rule 3 of the Rules of the District Court does not specify any time frame for a plaintiff to enter interlocutory judgment against a defendant who has failed to file a defence. Even if Gold Rich has sought directions or taken steps to proceed to trial, it remains entitled to enter interlocutory judgment against Nichole Tong. 43.Thirdly, there can be no estoppel because there was no detrimental reliance by Nichole Tong. As explained in Nichole Tong’s 3rd Affirmation, she did not understand why Gold Rich stated in its timetabling questionnaire that she did not file any defence, and that she had always believed that the Reply and Defence to Counterclaim was filed on behalf of both Let’s Go and herself. 44.Similarly, Nichole Tong’s solicitor also shared this belief and mentioned in her affirmation that she was surprised when she received the Default Judgment. In the premises, there could be no reliance by Nichole Tong on any conduct by Gold Rich as a representation that it would not enter interlocutory judgment against her. F3. Real prospect of success? 45.The third issue is whether Nichole Tong has shown a sufficiently meritorious defence with a real prospect of success. 46.Whilst I agree with Gold Rich’s submission that default judgment can be entered against a guarantor, Nichole Tong’s liability under the counterclaim as a guarantor means that her obligations are strictly co-extensive with those of Let’s Go as the principal debtor. 47.If Let’s Go successfully establishes its defence that the agreement was validly rescinded due to the misrepresentations made by Gold Rich, Nichole Tong’s liability under the guarantee extinguishes entirely. 48.The disclosed evidence demonstrates substantial factual disputes regarding the alleged misrepresentations, such as whether the Market was represented to be exclusively Japanese-themed, and whether the physical configuration of J18 rendered the necessary fire-safety approvals objectively impossible. 49.Gold Rich argues that the representation in relation to the Market’s theme is a representation of intention incapable of being true or false. However, I agree with Nichole Tong that the representation as to whether the Market is Japanese-themed relates to the current state of the Market and is a representation of fact. 50.As to the representation that the Market will remain Japanese-themed, it may still be “looked upon as a misrepresentation of existing fact, if at the time when it was made, the person making the statement did not in fact intend to do what they said or knew that they did not have the ability to put the intention into effect”: see Chitty on Contracts (36th ed), para 10-017. 51.I find that the questions of whether the alleged representations were made and whether they are false are genuine triable issues supported by potentially credible evidence. 52.First, Nichole Tong affirmed that the misrepresentations were made by way of inter alia verbal statements by Gold Rich’s representative, Amy Wong, to her. 53.Although Gold Rich denies that the misrepresentations were made, Amy Wong has not come forth to make any affirmation. Whether the misrepresentations were indeed made depends on the credibility of the witnesses which can only be tested at trial and cannot be determined at this stage. 54.Secondly, the Investment Proposal describes the Market as an “indoor Japanese-themed food street” with a “strong Japanese cultural ambiance”. This strongly supports Nichole Tong’s case. 55.Thirdly, as to the falsity of the misrepresentations, there does not appear to be any dispute that there were a playroom and Taiwanese teashop in the Market. 56.Fourthly, the engineering opinion from E & S Engineering Consultancy Co (“E & S”) supports Nichole Tong’s case that it is impossible to install a legally required individual fire shutter or obtain individual fire-safety approval, and so no F&B licence could be obtained. E & S also opined that the dividing walls were not compliant with the Fire Department’s requirements. 57.In the premises, I find that Nichole Tong has shown a real prospect of success in her defence. 58.Given that a meritorious defence with a real prospect of success has been demonstrated, the justice of the case demands that the matter be determined on its substantive merits rather than by entering judgment in default. I agree with Master Chiang that the Default Judgment should be set aside. 59.Given that the default is an inadvertent clerical error, I do not find any conditions should be imposed on the setting aside of the Default Judgment. F4. Master Chiang’s costs order 60.Paragraph 2 of Master Chiang’s Order provides that costs of the Setting Aside Application up to 31 March 2026 be to Gold Rich, and thereafter costs be in the cause. 61.The significance of the date of 31 March 2026 is that on that day, Nichole Tong and Let’s Go’s solicitors wrote to Let’s Go’s solicitors, explaining that it was a clerical mistake that the Reply and Defence to Counterclaim was only stated to be filed by Let’s Go instead of both Let’s go and Nichole Tong. This was confirmed in an affirmation filed by the solicitors dated 24 March 2026. 62.By the said letter, Nichole Tong proposed to deal with the Setting Aside Application by the parties agreeing to seek an order from the Court, inter alia:
63.By a letter dated 8 April 2026, Gold Rich rejected Nichole Tong’s proposal. 64.I agree that by 31 March 2026, the parties should have amicably disposed of the Setting Aside Application by accepting Nichole Tong’s proposal. Gold Rich refusal and its proceeding to file an affirmation in opposition to the Setting Aside Application was unreasonable. 65.Gold Rich countered by submitting that when the Setting Aside Application was heard, Nichole Tong had not taken out the Relief Application and therefore remained debarred from filing any defence to counterclaim. She would still have to seek the indulgence of the Court to do so. 66.However, that is a matter of the costs of the Relief Application and Amendment Application, and has nothing to do with the Setting Aside Application. 67.In the premises, I agree with the costs order made in paragraph 2 of Master Chiang’s Order. G. Relief Application 68.Nichole Tong is debarred by the Unless Order from filing and serving her defence to counterclaim. 69.Whilst the length of the delay is long, it is clear that there was no deliberate intention to ignore and disobey the Unless Order. The reasons given by Nichole Tong that the omission was an inadvertent mistake caused by her legal representative are accepted. 70.For the reasons explained above, Nichole Tong has a real prospect of success on the merits. Further, no date has yet been fixed for the trial. There would be little prejudice to Gold Rich if relief is granted, given that Nichole Tong’s liability under the guarantee is secondary and co-extensive with Let’s Go’s liability, and the trial between Let's Go and Gold Rich would still have to go ahead regardless. 71.Therefore, balancing the prejudice to both parties, I exercise my discretion to grant leave for Nichole Tong to apply for relief from sanction under the Unless Order out of time, and to grant relief from the sanction imposed in the Unless Order in the interests of justice. G. Amendment Application 72.Gold Rich sensibly submits that if the Court dismisses the Appeal and grants relief from sanction to Nichole Tong, it does not oppose:
I. Conclusion 73.By reason of the above, I make the following order:
Costs 74.The costs of the Appeal should follow the event. I make a costs order nisi that the costs of the Appeal be to Nichole Tong, with a certificate for counsel, to be summarily assessed. 75.As to the costs of the Relief Application and Amendment Application, since Nichole Tong and Let’s Go are seeking an indulgence from the Court, I make a costs order nisi that the costs of and occasioned by the Relief Application and Amendment Application be to Gold Rich, with a certificate for counsel, to be summarily assessed. 76.Any application to vary any of the above costs orders nisi should be made within 14 days from the date of this decision. 77.Should there be no application to vary the above costs orders nisi, I order that:
78.The court will then summarily assess the parties’ costs on paper.
Mr Samson Hung, instructed by Simon S M Kwok & Co, for the plaintiff (by counterclaim) Ms Joyce Lee, instructed by K B Chau & Co, for the 2nd defendant (by counterclaim) | |||||||||||||||||||||||||||||||||||||||||||||||
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