EPRO SYSTEMS (CHINA) LTD v. WONG TAK

DCCJ3861/2006

IN THE DISTRICT COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

CIVIL ACTION NO. 3861 OF 2006

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D E C I S I O N

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1. This is the Defendant's application for leave to amend the Defence.  The Plaintiff opposes the application on the ground that the application is a delaying tactic and an abuse of the court process, since the Plaintiff alleges that the chance of the Defendant successfully defending the claim is, on the face of its defence, slim.

2. The Plaintiff claims against the Defendant as the guarantor of the liabilities of a company named Linkfull Investment Group Ltd., for payment of an outstanding sum of $761,071.40.  The Plaintiff relies on an Agreement dated 10 September 2003.

3. In its original Defence, the Defendant claims undue influence, duress, misrepresentation, non est factum, the form of execution of the Agreement, and some form of promissory estoppel.  By its proposed amended defence, the Defendant seeks to abandon all his lines of defence, with the exception of promissory estoppel, which he relies on alone.

4. In its opposition, the Plaintiff claims that the Defendant is abandoning its original lines of defence in order to "dilute the effects of the incredible defences" and to salvage the credibility of the Defendant. 

5. The Plaintiff also claims that the proposed amendments reproduce particulars already included in the witness statements of the Defendant, and should not be allowed, as a pleading should not include evidence.

6. Finally, the Plaintiff claims that the proposed defence is an abuse of process to delay trial, as the Defendant has failed to apply for leave to amend until a date has been fixed for the pretrial review in March 2008,in circumstances when all the facts proposed to be pleaded in the Amended Defense were well within the Defendant's knowledge at the outset.  The Plaintiff claims that "most, if not all of the preparation works have been completed by the Plaintiff's legal team" on the basis of the existing pleadings, and if the amendments are allowed, the Plaintiff's team would have to work on the case again from scratch.

7. The principles for giving leave to amend pleadings have been correctly summarized by counsel for the parties.  Generally speaking, all such amendments ought to be made for the purpose of determining the real question in controversy between the parties.  The object of the court is to decide the rights of the parties, and not to punish them for mistakes they make in the conduct of their cases.  However late the proposed amendment, it should be allowed if it can be made without injustice to the other side, and there is no injustice if the other side can be compensated by costs.  At the end of the day, this is a matter of the court's exercise of its discretion, taking into consideration all the relevant circumstances of the case before it.

8. The Defendant has not pleaded or raised an entirely new case.  He has not even introduced any new facts.  The representations and facts relied upon to support the so-called Defence of estoppel were referred to in the original Defence, with further particulars furnished in the Defendant's witness statements.

9. By abandoning his original lines of defence, the matters in dispute between the parties have been narrowed.  The trial will no doubt be shortened.  Costs will be saved for the trial at least.  The court will be able to focus on and determine the rights and liabilities of the parties on the facts pleaded and identified in the proposed amended Defence.  I see no justification in insisting on the retention of the lines of defence which the Defendant has decided to abandon, or the facts in support of such lines of defence to be abandoned.

10. The Defendant has not raised any prejudice which cannot be compensated by costs.  If legal costs have been wasted, they can be ordered to be paid by the Defendant.  If legal costs have to be incurred to enable the Plaintiff's team to amend pleadings and to put new statements into place, such costs can be ordered to be paid by the Defendant.

11. Pure undue delay is not sufficient to bar an application to amend.  If the application to amend is made shortly before trial, the party amending should give adequate particulars of its amendments.  Here, the Defendant has pleaded particulars of the  Plaintiff's representation or promise not to enforce the guarantee, and particulars of the "previous transaction" and "similar promise" in its proposed paragraphs 12 and 14 of the draft Amended Defence.  I do not accept Counsel's submissions that these particulars in the proposed Defence can be called irrelevant or useless.  In my judgment, they are material facts which should be included, and they are consistent with the facts set out in statements filed by the Defendant earlier.

12. In the circumstances of the present case, when the application for leave to amend is made, albeit at a late stage, but before a date has been fixed for trial, when no new case is pleaded, and in the absence of any possible prejudice being established by the Plaintiff other than costs which can be compensated, I consider that leave to amend should be given.  The mere fact that a pleaded defence is difficult to establish is not a ground to disallow it at this stage of the proceedings, particularly where the merits are not readily apparent without a detailed investigation of the evidence, which was not done and should not be done at the hearing of this application.

13. I allow leave to the Defendant to amend the Defence in terms of the summons issued on 22 October 2007, and will hear the parties on costs. 

(Submissions on costs.)

14. After hearing the parties, I order that the Defendant is to bear the costs of and occasioned by as well as the costs thrown away by the amendment, including the costs of this hearing.