TSANG SIU TUNG v. THE INCORPORATED OWNERS OF ARGYLE HOUSE

HCA 166/2012

[2019] HKCFI 1187

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

ACTION NO 166 OF 2012

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D E C I S I O N

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1.  This is meant to be the trial of an action commenced by the plaintiff (“P”) against the Incorporated Owners of Argyle House (No 43 Argyle Street) (“D” and “No. 43” respectively). The cause of action is adverse possession. P is seeking a declaration that he has acquired a good possessory title to a specific portion on the Ground Floor of No. 43 which has been referred to by parties as “Shop South”. Shop South occupies part of an area on the Ground Floor which has been called by the parties as “the Middle Portion”.

2.  On 24 January 2019, one day before the PTR of this trial was set to be heard, D made an application for leave to file an Amended Defence and Counterclaim.  That application was subsequently heard and dismissed by me on 1 February 2019.  I gave my decision and read out in court my reasons on the same day.  I expressed my dissatisfaction in which the application had been conducted.  I refer to my written Decision which I will not repeat.

3.  On 3 April 2019 when Mr Lam, counsel for D, filed his written Opening for the trial (scheduled to start on 10 April 2019 for five days), it was said on D’s behalf that:

“ 1. [D] posts a preliminary issue whether the dispute area, namely the Shop South, is a common area of the Building (No.43).

2. Notwithstanding it has been stated in the Agreed Facts and admitted under the Amended Defence, [D] may seek leave to withdraw such an admission and put [P] to strict proof of the same.”

4.  That the Shop South is situated on a common part of No. 43 has never been in issue.  That has been specifically admitted by D in its Amended Defence (the “Admission”).  There was no attempt to withdraw the Admission during the last application for amendment.  In the witness statement of Madam Chiu Sui Fong filed for the purpose of these proceedings, the Admission was for all practical purposes confirmed.  As recent as 25 March 2019 when the Agreed Statement of Facts was prepared pursuant to the direction I gave during the PTR, it remained admitted that “… the Middle Portion was not allotted of any share and remains at all material times a common part of No.43.”

5.  Between the date when Mr Lam filed his Opening and the commencement of the trial, nothing had been done to notify P or the Court that an application to withdraw the Admission would (as opposed to “may”) be made.  In fact, according to Mr Chan, counsel for P, a bundle of documents comprising land search and other title documents were served on him by D, with no covering letter or anything.  As things turned out, those were the documents which Mr Lam ultimately referred to in support of D’s application to withdraw the Admission, as I will explain below.

6.  On the morning of the first day of the trial, Mr Lam sought to raise as a preliminary issue as to whether Shop South is on a common part.  He moved to and fro as to whether he would be making an application for leave to withdraw the Admission.

7.  One point he took was that as P is seeking a declaration, even with the Admission that the Shop South is on a common part, “the Court would scrutinize, that the Shop South is within the definition of common area of the Building before any declaratory relief would be granted in respect of land.”  His point is that if Shop South is not on a common part, and the paper owner who should be joined and should be in court being not, the declaration sought ought not to be made.

8.  Ultimately, after lunch on the first day of the trial, Mr Lam produced a set of proposed Re-amended Defence and Counterclaim and sought leave to dispute the averment that the Shop South is on a common part.  The Counterclaim for possession remains (albeit inconsistent with D’s primary position that the Shop South is not on a common area), but becomes framed on an alternative basis, ie in the eventuality of the Court finding that the Shop South is indeed on a common part (which D denies).

9.  I allowed Mr Lam to proceed with the application to amend.  I heard Mr Lam’s submissions.  There was no attempt to justify the late application.  He originally did not even seek to address the strength of his amended case.  I drew to his attention the case of Sowerby v Charlton [2006] 1 WLR 568, which has been held to be applicable to Hong Kong by our Court of Appeal in Lo Li Li Lily v Lui Fung He [2016] 3 HKC 483.  In that case, Brooke LJ observed at paragraphs 35 and 36 that:

“ 35. … the unreported judgment of Sumner J in Braybrook v Basildon and Thurrock University NHS Trust [2004] EWHC 3436 (QB) at [45] appears to us to offer valuable guidance on the way in which a court should exercise its discretion when determiningwhether or not to permit the withdrawal of an admission that wasmade after an action was commenced. After referring to a number of earlier cases he said, at para 45:

‘ From these cases and the CPR I draw the following principles. (1) In exercising its discretion the court will consider all the circumstances of the case and seek to give effect to the overriding objective. (2) Amongst the matters to be considered will be: (a) the reasons and justification for the application which must be made in good faith; (b) the balance of prejudice to the parties; (c) whether any party has been the author of any prejudice they may suffer; (d) the prospects of success of any issue arising from the withdrawalof an admission; (e) the public interest, in avoiding where possible satellite litigation, disproportionate use of court resources and the impact of any strategic manoeuvring. (3) The nearer any application is to a final hearing the less chance of success it will have even if the party making the application can establish clear prejudice. This may be decisive if the application is shortly before the hearing.’

36. 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.”

10.  I refer further to §18 of the decision of the Court of Appeal in Lo Li Li Lily, that when deciding whether leave should granted, the need of the applicant applying to withdraw an admission to put forward a convincing and credible explanation of the circumstances in which the admission was in fact made is, although not conclusive, a powerful factor.  That also goes to the issue of good faith on the part of the application.

11.  Mr Lam has made little effort in addressing those principles and matters which this Court is required to consider.  No explanation for the late application has been tendered, except perhaps that the point was only spotted late, which is hardly a reason.

12.  In the context of the application to amend, and on my invitation, Mr Lam subsequently addressed me, based on quite a number of title documents, on the issue as to whether the Shop South is on a common area.  A written submission on that point was produced on the morning of the second day of the trial.  I have considered those submissions.  I am of the view that on the materials before me, the point is arguable.  I say no more for reasons which will be obvious from what I am going to say below.

13.  Having heard Mr Lam’s submission, Mr Chan took a realistic approach and informed me that he would not resist the application to withdraw the Admission and to amend.  He told me that he however required an adjournment, so that P could, amongst other matters, engage an expert to deal with the issue.

14.  Mr Lam resisted any adjournment.

15.  The prejudice which P will suffer if I am to allow D leave to withdraw the Admission at the middle of the trial is obvious.  While it is true that P has the onus of proving its case, his case has been prepared on the basis of the Admission. If whether Shop South is on a common part had previously been raised as an issue, the case could have been prepared differently.  For example, other parties might have been joined.  P would lose this procedural option if the Admission were permitted to be withdrawn at this stage but without any adjournment.

16.  On the other hand, there is indeed the practice that a declaration will not be granted on admission — see Hong Kong Civil Procedure para 15/16/2.  I might indeed have to consider the issue as to whether Shop South is on a common area despite the Admission.  I am concerned about the prejudice which P would suffer if I were to dismiss the proposed amendment but nonetheless proceed to consider the issue despite the Admission.  In this regard, the Court does acknowledge Mr Lam’s (and Ms Mok’s) efforts in identifying the point and his fearlessness in raising it at this stage.

17.  At his stage, the wise words of Brooke LJ become particularly relevant.  Whilst the application was made late, and may not otherwise be justified on all fronts, I will have to consider all the circumstances of the case.  One decisive consideration in my mind is the fact that a declaration is being sought, that the Court might have to consider the point in question despite the Admission, but that if the Court were to do that without an adjournment, P would suffer serious prejudice.

18.  In the end, having balanced all considerations, and despite these trial dates being obviously milestone dates, I have decided to exercise my discretion and grant leave to amend (meaning necessarily that leave to withdraw the Admission is also granted), but adjourn the trial to a date to be fixed.

19.  I will hear counsel on costs and any direction on further conduct of the trial, and in particular any direction on expert evidence.

20.  On the issue of costs, Mr Chan submitted that the adjournment of the trial was occasioned by the late application for amendment of pleadings by D.  P was not at fault.  He and his client have been acting reasonably in, having heard Mr Lam, deciding not to oppose the application but accept the challenge to prove the issue.  P should not be penalized for being reasonable, and they surely do not accept that they cannot prove the issue.  He seeks an order that the costs occasioned by the adjournment be to P in any event (though not to be taxed or become payable until after the conclusion of the action).  

21.  Mr Lam repeated the point I have summarized above, that the relief sought being declaratory in nature, the Court in any event would have to consider the point even with the Admission. He submitted that to some extent, he has been doing the job which P should have been prepared to do.

22.  There can be no dispute that the adjournment was occasioned byD’s application for leave to withdraw an admission through the amendments. This is the starting point.

23.  On the other hand, there is some force in the argument that the overall burden remains on P to satisfy the Court that the facts and evidence justify the making of the declaration sought.

24.  Having looked at the matter in the round, it does appear to me that yesterday and today have not been totally wasted, though I cannot say the same about the three more days which the trial has been set down to run.  

25.  It the circumstances, and in exercise of my discretion, I am of the view that the appropriate costs order will be this, that ⅖of the costs wasted by the adjournment be P’s costs in the cause, and ⅗ of those same costs be to P.  All the costs are to be taxed if not agreed, but not to be taxed or become payable until after the conclusion of the action.

26.  I make no separate costs order in respect of the application for amendment, as the costs concerned have been subsumed into the costs wasted by the adjournment.