CHOW KAM HUNG v. HOI KONG IRONWARES GODOWN CO LTD

HCA 621/2012

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

HIGH COURT ACTION NO 621 OF 2012

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HCA 2294/2013

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

HIGH COURT ACTION NO 2294 OF 2013

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D E C I S I O N

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The applications

1.  There are 2 applications before this court:

(a) HCA 621/2012 (“HCA 621”), the defendant by a summons dated 9 August 2017 applies for leave to amend the Amended Defence and Counterclaim;

(b) HCA 2294/2013 (“HCA 2294”), the 1^st and 2^nd defendants by a summons dated 9 August 2017 apply for leave to amend (a) the Amended Defence and (b) Amended Answers to the plaintiff’s Request for Further and Better Particulars of the Amended Defence.

2.  The above two actions have been ordered to be tried before the same judge.

3.  The plaintiff (“P”) opposes the amendment applications, except for those parts that are not opposed.  Some of the proposed amendments are agreed by P.  This Decision will focus on the disputed parts of the applications.  The parties are legally represented.[1]

The brief factual background

4.  The brief facts of the matters can be distilled from the P’s written submissions.

5.  Broadly speaking, HCA 621 and HCA 2294 have the same plaintiff. HCA 621concerns P and Hoi Kong Ironwares Godown Co. Ltd. (“Hoi Kong”) where P and Hoi Kwong formed a partnership business in ironmongery and stainless steel.  There is no partnership name for this business pleaded in the pleadings.  P claimed against Hoi Kong for his share of profit in the partnership and alternatively for a dissolution of the partnership.  In HCA 2294, P claims against the first defendant (“D1”) in respect of their partnership on the purchase of a piece of land in the New Territories.  D1 is the controlling shareholder of Hoi Kwong.  D2 is the company registered as the owner of the piece of land in the New Territories, which was subsequently resumed by the government.  As a result, this piece of land has gained profit, which Ds refused to account to P. Alternatively, P applies for dissolution of the partnership.

P’s grounds of objection

6.  P’s objection to the proposed amendments by Ds is that Ds are attempting, by way of amendment of the pleadings, to withdraw the admissions that they had made in the original Defence.  These are what P submits in the written submissions for the argument:

(a) The primary ground of objection is that the proposed amendments are effectively a withdrawal of admission without leave.  [10]

(b) … …since the commencement of the actions in 2012, on the common issue of the ownership of the Land, all the defendants have admitted on pleadings that the Land was an asset of a partnership – the only dispute is the identity of the partnership, i.e. of the partnership between P and Mr. Ng as pleaded in P’s case, or of Hoi Kong Partnership as pleaded in the cases of all the defendants in both actions.  The practical effect of the same is that, subject to the alternative defence of settlement agreement and/or limitation, the defendants in both actions admit that P is entitled to the profits arising from transaction of the Land as part of his partnership assets in any event. [11(3)]

(c) The proposed amendments now seek to withdraw the admission.  It is now said that the Land was not an asset of any partnership. It is now said that it was acquired by Shine Wheel, and that it was rented to Hoi Kong Partnership. [11(4)]….

Ds’ argument – no withdrawal of admissions

7.  On the other hand, Ds submit that the proposed amendments do not amount to withdrawal of admissions.  They submit:

(a) the defendants’ case on the alleged Land Partnership remains the same. It is averred that there was never any Land Partnership as alleged by P[2];

(b) The defendants have only further particularized the facts and clarified its case in support of their denial of the alleged Land Partnership.[3] [16]

Discussion

8.  The crux of the dispute therefore turns on whether the proposed amendments amount to withdrawal of admissions.

9.  This morning, there has been a very useful dialogues between the Court and the parties on the reasons for P to say that there are admissions by D in HCA 621 and Ds in HCA 2294.  The admissions as alleged are that the Hoi Kwong partnership had expanded its business to acquire land property and that there was a government resumption of land in HCA 621.  D argues that those are not admissions because P has never made out a case against D in the Statement of Claim, for which D had admitted. D’s application is therefore a change of the facts as pleaded by D.  P has put forth no further argument.

10.  As to HCA 2294, P alleges that Ds have now attempted to withdraw their admission that the land purchase was under a partnership, which Ds had included in the Amended Defence and Counterclaim, paragraph 13.  In this paragraph, Ds allege that the land was part of the asset of Hoi Kong partnership.  But this is different from admitting a partnership of the parties in HCA 2294.

11.  Having considered the references by Ds in the pleadings, I agree with Ds that the proposed amendments do not amount to withdrawal of admissions.  Ds have never admitted any partnership in relation to the acquisition of the said piece of land in the New Territories.  Paragraph 2 of the Amended Defence of Ds specifically denied there was a partnership business in relation to land. Paragraph 3(3) states: “there was never a partnership in relation to land between the Plaintiff and the Defendants.”  Paragraph 6 further confirms:” …The Defendants aver that there was never a partnership with the Plaintiff in relation to land at all …”.  Paragraph 10 repeats the same.

12.  It is really difficult for P, in light of the above, to argue that Ds had admitted partnership in HCA 2294 in relation to land in the first place.

13.  As to other complaints of delay and at the late stage of the proceedings that the applications are taken out, I consider that they cannot be the reasons for P to oppose the applications as the primary objective is that the court should make adjudication on the merits of the case unless P can show to this Court he will suffer prejudice which cannot be compensated by costs or that Ds’ applications are an abuse of the proceedings.  From the evidence before me, I do find such reasons though Ds may have been seen as delaying the proceedings in the past.  However, such deficiencies in the past proceedings do not reflect that Ds are abusing the legal proceedings.

14.  I therefore allow the applications.

15.  As to the costs of the applications, the costs of and occasioned by the amendments are to P, to be taxed if not agreed in any event.  As to the costs for today’s hearing, including any costs reserved, O.62, r.3 RHC should apply.  Ds’ costs are to be assessed under O.62, r.9A, taking into consideration of the factors of delay on the part of the defendants. There are two separate bills for the respective actions.  On a broad brush approach, the costs of the actions (with a certificate for counsel) should be $25,000 for HCA 621 and $25,000 HCA 2294 respectively , to be paid within 14 days from the date hereof.

16.  This court shall make an order in term as follows:

(a) D’s application in HCA 621 is allowed;

(b) Ds’ application in HCA 2294 is allowed;

(c) The Re-amended Defence and Counterclaim for HCA 621 and the Re-Amended Defence for HCA 2294 be filed and served within 7 days from the date hereof;

(d) Respective P in HCA 621 and HCA 2294 be at liberty to serve the amended pleadings in response to the defendants’ amendments herein within 28 days from the service of the re-amended pleadings from the defendants;

(e) The costs of the applications are as per paragraph 15.