CHOW CHING YEE v. WONG HUNG KEE

HCA 2969/2017

[2020] HKCFI 2555

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

ACTION NO 2969 OF 2017

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D E C I S I O N

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Background

1.  This is an appeal from the decision of Master H Au‑Yeung on an interlocutory dispute. The main issue is whether the Amended Defence should be expunged as ordered by the Master on the ground that it sought to withdraw admissions without leave. 

2.  This action has a long history, having been begun in the District Court in 2004.[1] It was transferred to the High Court in December 2017.  No substantive step was taken by either party in the proceedings after the Defence was filed in May 2004, until activities revived in 2015.[2]

3.  The action concerns two pieces of land known as Section F and Section G of Lot No 836 in Demarcation District No 130, Tuen Mun, New Territories, to which I shall refer simply as “Section F” and “Section G” respectively.  It is not in dispute that (1) prior to the transaction in question the plaintiff was the registered owner of Section G and also one of the registered owners of Section F holding 3/5^th shares therein; (2) the defendant was an indigenous villager entitled under the Government’s Small House Policy to apply for permission for the erection of a 3‑storey house; (3) the plaintiff and the defendant executed a deed on 2 July 1998 (“Deed”) relating to the construction of a house on Section G; (4) as part of the transaction, by an Assignment dated 2 July 1998 the plaintiff assigned Section G and 2/15^th parts of Section F to the defendant; (5) also as part of the transaction, the defendant paid a sum of $400,000 to the plaintiff on about 2 July 1998; (6) for reasons that are disputed, the transaction did not proceed to fruition but was terminated in around 2002 or 2003; and (7) the defendant has since constructed a house on Section G without the involvement of the plaintiff.  The parties are in dispute now as to the true nature of the transaction they entered into and its legal consequences especially in terms of the beneficial entitlements to Sections F and G.

4.  Because of the nature of the arguments, it is necessary to examine the pleaded cases of the parties both before and after amendments.  The plaintiff’s case, as pleaded in her Statement of Claim dated 5 January 2004 endorsed on the Writ of Summons, is as follows:

(1)  By the Deed, the plaintiff and the defendant agreed to cooperate to develop Section G by constructing thereon a house in accordance with the Small House Policy.

(2)  Paragraph 6 pleads that it was agreed between the parties that the defendant shall hold Section G and 2/15^th parts of Section F on trust for the plaintiff until the completion of the development and the assignment of the second floor and roof of the house and a car‑parking space to the plaintiff for her own use and occupation (paragraph 6(b)); that the defendant shall upon the signing of the Deed pay a sum of $400,000 to the plaintiff as security deposit for the due performance of his obligations (paragraph 6(d)); and that upon termination of the Deed the defendant shall transfer Section G and 2/15^th parts of Section F back to the plaintiff and pay the plaintiff remuneration at the rate of $6,000 per month from the date of the Deed to the date of termination, which could be set off from the security deposit held by the plaintiff (paragraph 6(f)).

(3)  Pursuant to the Deed and not otherwise, the plaintiff assigned Section G and 2/15^th parts of Section F to the defendant by an assignment dated 2 July 1998 (paragraph 9). 

(4)  The plaintiff duly applied to the government authorities for the necessary permission.  One of the conditions imposed was that the owners of Section F had to grant a right of way over Section F as an emergency vehicular access (“EVA”) for, inter alia, the house to be erected on Section G.

(5)  In breach of the implied term of the Deed requiring him to cooperate with the plaintiff and to comply with any reasonable requirement, the defendant as one of the registered owners of Section F wrongfully refused to give his consent for the grant of the right of way for the EVA.  As a result, the development of Section G could not proceed.

(6)  The defendant had thereby repudiated the Deed. The plaintiff by her solicitors’ letter dated 3 October 2003 accepted the defendant’s repudiation, thus terminating the Deed.

(7)  Accordingly, the plaintiff claims against the defendant, inter alia: (a) an order that the defendant transfer Section G and 2/15^th parts of Section F back to the plaintiff; (b) payment of remuneration of $6,000 per month from 2 July 1998 to 3 October 2003 in the total sum of $378,000; and (c) damages for the plaintiff’s loss and damage caused by the defendant’s breach of the Deed.

5.  The Writ was amended on 5 February 2004 without amending the Statement of Claim.  The defendant filed his Defence on 22 May 2004.  As then pleaded in the Defence, the defendant broadly agreed with what the plaintiff had pleaded about the nature and terms of the transaction,[3] but averred that it was an illegal transaction and therefore unenforceable.  In particular:

(1)  It is admitted that on 2 July 1998, the parties entered into the Deed whereby they agreed for the plaintiff to build for the defendant a house compliant with the requirements of the Small House Policy.[4]

(2)  Subject to what is further pleaded in the Defence, paragraphs 6(a)‑(f) of the Statement of Claim are admitted.[5]  It is admitted that under the express term pleaded in paragraph 6(f) of the Statement of Claim, the defendant was “under certain contractual obligation” towards the plaintiff.[6]

(3)  Paragraph 9 of the Statement of Claim is admitted.[7]

(4)  The Deed was performed by, inter alia, (a) the plaintiff transferring Section G to the defendant as paper owner thereof but its beneficial ownership was and still is vested in the plaintiff, and (b) the plaintiff requiring the defendant to sign various documents for the plaintiff’s benefit so as to enable a building licence to be issued for the construction of a house at Section G.[8]

(5)  The Deed is a sham in that at no time was there any intention or agreement on the part of either party that the plaintiff would be engaged to build a house for the defendant.  It was instead their intention and agreement that the plaintiff would purchase and acquire the defendant’s right under the Small House Policy to enable the plaintiff to develop, for her own purpose and benefit, a house at a piece of land to be directed by the defendant.[9]

(6)  The Deed is an illegal agreement which is void and whose performance or continued performance is illegal and against public policy, in that (a) it involves the defendant declaring to the District Officer that he was the beneficial owner of Section G, a fact both parties knew to be false; (b) the plaintiff intends by its performance to deceive the Government into believing that the real applicant for the building licence was the defendant when in fact it would be the plaintiff; (c) it would result in persons with no entitlement under the Small House Policy taking a benefit thereunder.[10]

(7)  The parties are in pari delicto so that the court should not enforce the Deed.[11] Upon discovering this, the defendant refused to continue to perform the Deed.[12]

(8)  By reason of the illegality, the defendant is not obliged to re‑transfer Section G to the plaintiff.[13]  Alternatively, if the court finds that re‑transferring Section G to the plaintiff would not involve performing an illegal agreement, the defendant is willing to act under the direction of the court.[14]

6.  The Writ was re‑amended with leave given by Master A Ho on 16 January 2019.  The amendments made to the Statement of Claim were not fundamental.  Among other things, they (1) added an averment that a fictional consideration of $250,000 for the transfer of the land was stated in the Deed and the Assignment; and (2) added an averment that there was to be inferred a common intention that the defendant would hold Section G and the interest in Section F on trust for the plaintiff absolutely.

7.  As is usual practice, when giving the plaintiff leave to re‑amend, Master A Ho also gave the defendant leave to file and serve an Amended Defence within 28 days thereafter. 

8.  On 18 March 2019, the defendant filed his Amended Defence, purportedly pursuant to the leave granted by Master A Ho. However, instead of making amendments that corresponded to the re‑amendments of the Writ, the defendant deleted the existing body of the Defence in its entirety and substituted 17 new paragraphs.  The case pleaded in the Amended Defence may be summarised as follows:

(1)  It was agreed between the parties that Section G and 2/15^th parts of Section F be purchased by the defendant from the plaintiff at the price of $400,000,[15] which the defendant duly paid the plaintiff after executing the Deed.[16] The common intention was that the defendant would become the legal and beneficial owner of Section G and 2/15^th parts of Section F.[17] 

(2)  The plaintiff would be the developer but the defendant would pay all the expenses of the construction of the house when reasonably required by the plaintiff to do so.[18] After completion of the house, the plaintiff would pay $400,000 to the defendant, and the second floor and the roof with the use of a car‑parking space would be assigned by the defendant to the plaintiff.[19]  Until such assignment, the defendant shall hold the same (ie the second floor and the roof) on trust for the plaintiff absolutely.[20] 

(3)  The defendant was illiterate in English and not aware that a consideration sum of $250,000 was stated in the Deed and not aware of the meaning of “security deposit” as a description of the sum of $400,000.[21]

(4)  It was the parties’ common intention that the plaintiff would apply for the requisite governmental permission and complete the construction of the house within 1 year of obtaining permission, and that the application for construction of the house would be completed within about 2 years after the Deed (ie in about 2001).[22]

(5)  The plaintiff repudiated the Deed by her failure to obtain the requisite permission for the construction of the house by 2001.[23]  In about 2002 or 2003, the defendant accepted the repudiation by withdrawing the authorisation given to the plaintiff in relation to the application for construction of the house.[24] 

(6)  In about 2014, the defendant, after obtaining the requisite permission, constructed a house on Section G at his own cost.[25]

(7)  As to the term pleaded in paragraph 6(g) of the Re‑Amended Statement of Claim, it was stated in the Deed that it was only if the government authorities ruled that the defendant did not have the entitlement to build the house, that (i) the Deed would be terminated, (ii) the defendant would transfer Section G and 1/5^th part or share in Section F back to the plaintiff, and (iii) the defendant would pay remuneration to the plaintiff at the rate of $6,000 per month.[26]

(8)  It was never agreed that the defendant should give his consent for the grant of EVA over Section F.[27]  If the defendant did fail or refuse to give such consent, this happened after the plaintiff’s repudiation and constituted conduct signifying his acceptance thereof.[28]

9.  On 1 April 2019, the plaintiff filed her Reply to the Amended Defence.  Some further interlocutory steps were taken, which will be referred to below, before the plaintiff took out a summons dated 8 August 2019, whereby she applied for an order that 5 amendments made in the Amended Defence (being the deletions of paragraphs 6, 8, 15, 19 and 24 of the original Defence) be disallowed on the basis that they amounted to a withdrawal of admissions without the leave of the court.

10.  In response, by summons dated 3 September 2019, the defendant applied for (1) retrospective leave to withdraw the admissions (including those set out in the plaintiff’s summons) and to file his Amended Defence; (2) an order that the Amended Defence do stand; and (3) leave to re‑amend his Defence.  The proposed re‑amendments are not substantial and seek to add, inter alia, that the parties agreed that upon completion of the house, $400,000 would be paid by the plaintiff to the defendant to purchase the second floor and the roof (with a car‑parking space) and that such purchase would take place after the 5‑year alienation restriction so as to avoid the need to pay a premium.

11.  Both summonses came before Master H Au‑Yeung on 8 January 2020.  He dismissed the plaintiff’s application to disallow the amendments on the ground that the plaintiff had taken a number of fresh steps thereafter, and could not therefore invoke the power under RHC Order 2 rule 2(1) to set aside the amendments as an irregularity.  However, the Master also rejected the defendant’s application for leave to withdraw admissions, as he found the explanations for the allegedly mistaken admissions not credible, and that the defendant had failed to raise a triable issue by the Amended Defence that he held Section G and 2/15^th parts of Section F beneficially rather than on trust for the plaintiff.  In the result, he ordered, inter alia:

(1)  The Amended Defence (and consequentially the Reply) be expunged.

(2)  Leave be granted to the defendant to file and serve an Amended Defence with amendments consequential to the plaintiff’s re‑amendments in January 2019 but incorporating all previous admissions specified in the plaintiff’s summons.  If the defendant wished to make any other amendments, he would have to take out a summons.

12.  The defendant now appeals against the Master’s decision.

13.  The plaintiff has subsequently issued a summons seeking judgment on the admissions, in the form of a declaration that the defendant holds Section G and 2/15^th parts of Section F on trust for the plaintiff absolutely.  I have directed that this summons be dealt with after the disposal of the defendant’s appeal.

Discussion

14.  The Amended Defence, when filed as it was on 18 March 2019, was open to at least two objections.  First, although the Master’s order did not expressly say so, the permission for the defendant to amend his Defence was impliedly limited to consequential amendments (see Squire v Squire [1972] Ch 391; Wong Wai Pong v Leung Cho Sze (HCAJ 249/1980, 14 May 1982)).  This means it did not extend to permit “amendments of the defence which relate only to those allegations or contentions contained in the statement of claim that are not affected by amendments to the latter”: Squire, at p 398G.  Secondly, as amendments including wholesale deletions of paragraphs containing admissions, they required leave for the withdrawal of admissions, which had not been obtained.[29]

15.  Faced with that pleading, the plaintiff could have objected and applied either to have its filing set aside as an irregularity pursuant to Order 2 rule 2(1), or to have the offending amendments disallowed or struck out: Wing Ming Garment Factory Ltd v The Incorporated Owners of Wing Ming Industrial Centre (HCCT 60/2006, 10 September 2013); Wong Wai Pong, supra.

16.  The plaintiff, however, substantively pleaded her Reply to it (by her previous counsel, not Ms Law) instead of objecting to the pleading.  In her submissions for the plaintiff, Ms Law stated that no objection was taken then due to “inadvertence”.  I am unable to accept this assertion which is not supported by any evidence.  A single glance at the Amended Defence would have shown that the amendments went far beyond what could be described as consequential and involved withdrawing admissions.  In fact, the plaintiff’s Reply specifically averred that the inferred common intention for the defendant to hold the relevant property on trust was “a fact previously admitted by the Defendant”.[30]

17.  Not only did the plaintiff file a Reply, but the parties proceeded to take many further interlocutory steps.  Thus they exchanged witness statements on 31 May 2019 (pursuant to a consent summons dated 12 April to extend time to 18 April, and a further extension obtained under the defendant’s summons dated 24 April).  They both filed a further list of documents on 13 and 14 June respectively.  By summons of 8 July the plaintiff sought leave to file two supplemental witness statements, and a witness statement of a solicitor which dealt with the defendant’s allegations (in support of his Amended Defence) that the Deed had not been explained to him and he did not understand it when he executed it.  That summons was dealt with by consent on 11 July, on terms that also gave the defendant leave to file and serve supplemental witness statements within 28 days (which were subsequently filed on 7 August).  The plaintiff filed her supplemental statements on 15 July.  The parties also filed their respective listing questionnaires.  In the plaintiff’s version dated 22 July 2019, she confirmed that no further interlocutory application would be taken out, that all steps to prepare for trial had been taken, and that it was appropriate to set the case down for trial, and leave to set down was sought accordingly.  The defendant’s questionnaire stated that his counsel was preparing re‑amendments to the Defence and supplemental witness statements. 

18.  It was only by her solicitors’ letter dated 5 August 2019 that the plaintiff, for the first time, raised objection to the Amended Defence, and it was only on 8 August that she issued her summons for an order that the specified amendments be disallowed.

19.  The plaintiff’s summons was mistakenly stated to be taken out under Order 27 rule 3, but that mistake was not fatal.  The Master approached the plaintiff’s application as one made under Order 2 rule 2(1) to set aside an irregularity.  That rule provides:

“ An application to set aside for irregularity any proceedings, any step taken in any proceedings or any document, judgment or order therein shall not be allowed unless it is made within a reasonable time and before the party applying has taken any fresh step after becoming aware of the irregularity.”

He dismissed the plaintiff’s summons because the plaintiff had taken a number of “fresh steps” with knowledge of the irregularity.  There is no appeal by the plaintiff from this decision.

20.  On this aspect I agree with the Master.  Whether regarded as an attempt to set aside an irregularity under Order 2 rule 2(1) or to strike out under Order 18 rule 19 or the court’s inherent jurisdiction, the plaintiff’s application came too late.  The condition in the former that the party should not have taken any fresh step after becoming aware of the irregularity reflects the general principle of waiver and estoppel in procedure: see Hong Kong Civil Procedure 2020, §2/2/3. 

21.  That principle is not only involved in Order 2 rule 2(1) but is of general application.  It has been stated in Handley on Estoppel by Conduct and Election (2^nd ed) at §15‑022:

“ A litigant may be faced with a choice between inconsistent steps in the litigation. If he represents to his opponent that he has adopted one and the latter changes his position and would be prejudiced if the election was reversed the representor may be estopped from doing this.”

22.  The same work also recognised at §14‑001 that there are choices that are not binding without an estoppel:

“ Election in procedure involves choices made during proceedings before final judgment or award. Such choices are not binding in the absence of an estoppel because of the power to allow amendments, and the control the Court or tribunal exercises over its own procedures.”

This may be read with the following passage at §15‑022:

“ However representations about the conduct of litigation are often provisional or only statements of intention. Until the trial finishes a litigant may be able to change his election or seek the leave of the Court to do so if this is necessary.”

23.  The general rule is described in Halsbury’s Laws of Hong Kong (2^nd ed), Vol 26, p 576, as follows:

“ Parties to litigation who have continued the proceedings with knowledge of an irregularity of which they might have availed themselves are estopped from afterwards setting it up …”

24.  In Lam Fung Ying v Ho Tung Sing and another[1993] 2 HKLR 187, the Court of Appeal applied the following principle, which was undisputed, as set out in Spencer Bower & Turner, Estoppel by Representation (3^rd ed) at p 333:

“ ... it very frequently happens that a party litigant is confronted with the necessity of immediately making a definite choice between two possible courses of action which are mutually exclusive. Whenever this occurs, the general rule of estoppel by election comes into play: that is to say, if by words, or (as is almost invariably the case) by conduct or inaction, he represents to the other party litigant his intention to adopt one of two alternative and inconsistent proceedings or positions, with the result that the latter is thereby encouraged to adopt or persevere in a line of conduct which he otherwise would have abandoned or modified, or (as the case may be) change tactics from which he otherwise would never have deviated, the first party is estopped, as against his antagonist, from resorting afterwards to the course or attitude which, of his free choice, he has waived or discarded.”[31]

25.  An example of waiver of irregularity may be found in Re Estate of Au Kong Tim [2014] 4 HKLRD 730, where the defendant failed to file an affidavit of testamentary scripts before the pleadings as required by Order 76 rule 5. Nevertheless the parties had proceeded to file their pleadings and exchange witness statements.  B Chu J held that these were steps by which the plaintiffs had waived the irregularity, who could not therefore apply to strike out the defence and counterclaim on that ground.

26.  In Roebuck v Mungovin [1994] 2 AC 224, it was pointed out that a representation by a party to litigation as to the further conduct of the proceedings would be a representation as to future conduct which could at most only raise an equitable estoppel (as opposed to a legal estoppel), and that the nature of the relief to be given when an equitable estoppel was raised was highly flexible, giving the court a discretion.[32] This decision was applied in Chinachem Charitable Foundation Ltd v Chan Chun Chuen & others (HCAP 8/2007, 15 May 2009) where the court gave leave to a party to adduce handwriting expert evidence despite that the same party had previously indicated it would not be calling any such expert and the other party had meanwhile disclosed its expert report.

27.  It may be noted that in Roebuck, the defendant was faced with delay and inaction on the plaintiff’s part, rather than a specific step involving an irregularity that presented a stark choice of either objecting to it or waiving the irregularity.  Further, although the relief for an equitable estoppel may be discretionary, it was said there that if the plaintiff was led by the defendant’s conduct to incur substantial legal costs, the court might attach “considerable weight” to the defendant’s activities in assessing whether he should be barred from applying to strike out the action (see p 237A).  In Chinachem, there was no real question of one party being led to act on the other party’s representation to its prejudice by taking steps that would become wasted.  The disadvantage to the former of having disclosed its expert report first was not considered by the court to carry much weight as the experts should act independently in offering their opinions to the court (see §37).

28.  In the present case, the plaintiff was faced with two mutually exclusive courses of action.  By taking steps in the proceedings as set out above, the plaintiff in my view unequivocally represented that she had elected not to object to the defendant filing his Amended Defence.  The plaintiff clearly decided to take her chance of success or failure on the merits of the parties’ respective cases as then pleaded.  On this basis the parties, particularly the defendant, took steps including the filing of various witness statements, which would not have been done had there been an outstanding challenge to the Amended Defence.  The defendant did not only incur much time and costs in these steps but also prepared and disclosed his evidence by way of witness statements.  As the Master recognised, his ruling meant that the steps taken and costs incurred by the defendant on the basis of his new defence would be wasted and that he would be forced to run his previous defence of illegality and incur further costs for doing so.  The prejudice to him, if the plaintiff were to be allowed to turn back the clock and challenge the filing of the Amended Defence, would seem to me to be very substantial indeed.  In contrast, holding the plaintiff to the course she had elected would simply mean that the parties would go to trial on the case they have each chosen to plead and the plaintiff would have to prove positively the matters previously admitted by the defendant, but there is no suggestion that her ability to do so had been impaired by the passage of time or otherwise prejudiced.  It would of course also mean that the plaintiff could not attempt to ask for partial judgment on the admissions — which she had chosen not to do for 15 years since 2004.  In these circumstances it seems to me it would be inequitable for the plaintiff to be permitted to challenge the Amended Defence on the stated ground.

29.  There is a suggestion in Ms Law’s submissions that the plaintiff was unaware of her options after the Amended Defence was filed.  I cannot accept this speculative assertion.  The plaintiff was represented throughout,[33] and there is no basis to think that the legal advisers were unaware of the procedural rules.  Even if they had not specifically advised the plaintiff about them, their conduct was the plaintiff’s conduct of the case.  Nor is the suggestion supported by the plaintiff’s affirmation, which was prepared by her new solicitors in response to the defendant’s affirmation which specifically raised the contention of waiver and estoppel.  All that was said in the plaintiff’s affirmation was that she “had sought different legal advice on the case”.[34]

30.  Accordingly, agreeing with the Master, I consider that it was not open to the plaintiff to challenge the amendments.

31.  Where I part company with the Master, with respect, is that, having come to the conclusion that the plaintiff’s application to disallow the amendments should be dismissed, that in my view should be the end of the matter.  While the court may have a power, of its own motion, to disallow or strike out certain amendments of pleadings on the ground that they amount to a withdrawal of admissions without leave, proceedings in our courts are generally adversarial in character and it would be a rare case indeed in which it would be proper for the court to do so having come to the view that it would be inequitable to permit the other party to apply for such an order.

32.  On behalf of the defendant, Mr Chan submits that having dismissed the plaintiff’s summons, the Master should not then make an order expunging the Amended Defence, giving her precisely the relief sought. Likewise, on behalf of the plaintiff, Ms Law says — and I agree — that the Master’s conclusion that the plaintiff’s summons should be dismissed is inconsistent with his permission for the plaintiff to object to the defendant’s summons.  She goes on to submit that the proper conclusion that should have been reached by the Master is for the plaintiff’s summons to be allowed.  But the plaintiff has not appealed against the dismissal of her summons and that submission is not open to her.

33.  For completeness I have considered the other matters referred to by the Master in his decision by reference to the factors mentioned in Re Ng Wai Jing at §19. 

(1)  First, as to the reasons for applying for withdrawal of admissions, it is in my view, regrettably, not incredible for a litigant to say that he has not received sound or adequate advice from his legal representatives: see eg Singh Balwinder v Sino Phil Engineering Services Ltd & another [2007] 1 HKLRD 560.  No doubt the plaintiff will try to impugn the defendant’s account at trial but I would not go so far as to conclude that his explanations are incredible just by reviewing the papers.

(2)  As to the prospects of success of the defendant’s case as amended, Ms Law prays in aid a cooperation agreement between the parties dated 9 June 1998, but that document has not been pleaded by the plaintiff at all or referred to in her affirmation for the purpose of the summonses.  Also, clause 13 of the Deed provides that it supersedes all previous agreements between the parties.  Ms Law further relies on clause 3(f) of the Deed[35] as providing that Section G and the 2/15^th parts of Section F are held on trust for the plaintiff, but it may be argued that the clause only means that the second floor and roof (with the use of a car‑parking space) will be held on trust for the plaintiff.  Clause 1 in contrast states that the plaintiff shall in consideration of the defendant’s covenants transfer Section G and 2/15^th parts of Section F “absolutely” to the defendant at the consideration of $250,000.  Further, while the plaintiff wishes to hold the defendant to the Deed, the plaintiff’s own case involves saying that there is something “fictitious” regarding the Deed (ie the consideration of $250,000 stated in clause 1).  Overall, I do not think that in the present circumstances a lengthy investigation into the prospects of success should be conducted on the affidavits, especially given the plaintiff had elected to meet the defendant’s case on the merits and both sides had filed witness statements and supplemental witness statements for the purpose of trial. 

(3)  Finally, as to public interest, I do not think it favours the plaintiff’s position in this appeal.  If anything, since the parties had proceeded on the basis of the Amended Defence in preparation for trial and the case was ready to be set down, the avoidance of satellite litigation would have suggested that the plaintiff’s belated objection to the pleading should not be entertained.

34.  At the end of the day, as the Court of Appeal emphasised in Re Ng Wai Jing[2016] 2 HKLRD 1460 at §20 (quoting from Sowerby v Charlton [2006] 1 WLR 568 at §36) in relation to the discretion to allow withdrawal of admissions:

“ Above all, the exercise of any discretion will always depend on the facts of the particular case before the court. The words ‘will consider all the circumstances of the case’ have particular resonance in this context.”

35.  The special fact of this case is that the plaintiff, with full legal representation, had conducted herself so as to represent to the defendant that she had elected not to object to the withdrawal of admissions, and on the basis of the pleadings as they stood, the parties had gone on intensively to take various steps in preparation for trial. 

36.  In all the circumstances, and bearing in mind that, as stated in Order 1A rule 2(2), the primary aim in exercising the powers of the court is to secure the just resolution of disputes in accordance with the substantive rights of the parties, it seems to me the Amended Defence should be allowed to stand.

37.  Finally, since the plaintiff has raised no separate opposition to the proposed minor re‑amendments of the Amended Defence if it is not expunged, that application should be allowed.

38.  For the reasons above, the defendant’s appeal is allowed.  The Master’s order is set aside and in place thereof there will be an order that: (1) for the avoidance of doubt, there be retrospective leave for the defendant to file his Amended Defence dated 18 March 2019; (2) the defendant do have leave to re‑amend his Defence in the manner shown in green in the draft Re‑Amended Defence annexed to his summons dated 3 September 2019 and to file and serve the same within 7 days; (3) the plaintiff do have leave to amend her Reply consequentially and file and serve an Amended Reply, if any, within 7 days thereafter.

39.  As for costs, there will be an order nisi that (1) the plaintiff do pay the defendant’s costs in relation to the plaintiff’s summons dated 7 August 2019; (2) the plaintiff do pay 30% of the defendant’s costs in relation to the defendant’s summons dated 3 September 2019; (3) the costs of and occasioned by the re‑amendments of the Defence be paid by the defendant to the plaintiff.  All the costs are to be paid in any event, and taxed on a party and party basis if not agreed.