HUI (ANNIE) GUO v. YUEDONG XU AND OTHERS

HCCL 3/2019

[2022] HKCFI 3785

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

COMMERCIAL ACTION NO 3 OF 2019

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DECISION

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1.  These are my succinct reasons for allowing this amendment application in respect of the Defence of the 1st Defendant (“Xu”), with the exception of paras 13.7A(c), (g), (h), (k) and (l), 13.7C (the reference to Mr Zhang’s witness statement), 42A.3 and the opening part of the first sentence of 42A.4. The disallowed parts are matters of evidence which have no place in a pleading.

2.  A summary of this case can be found in a previous Decision of M Chan J in [2019] HKCFI 2171, [1]-[10]. 

3.  The applicable principles can be found in Re Hin-Pro International Logistics Ltd [2016] 1 HKLRD 1367, per P Ng J, [13]-[18].

4.  There are 5 Categories of amendment as identified in para 19 of the Skeleton Arguments of Mr Wong SC, who appears for the Plaintiff (“Guo”).  There is no objection to Category 4 (para 18.10(c) of the draft Amended Defence) which seeks to correct a factual error. 

5.  Every conceivable objection has been taken with the proposed amendments.  With respect, some of the arguments have little merit and it is unnecessary to deal with all of them.

6.  On the objection of delay in making this application, whilst it may be said that Xu should have made this Amendment Application before the last day of the deadline for interlocutory application, given that there is no trial date yet for this action and in light of the applicable principles I fail to see this as a good ground to deny the Amendment.

7.  As regards the alleged prejudice which cannot be compensated by costs, namely, the demise of Mr Carson, who is said to be able to give evidence on the dealings between Gou and Mr Billis, 3 points can be made :

(1)  I agree with Mr Ho, who appears for Xu, that Guo’s dealings with Mr Billis were matters pleaded and should be proved by her.  If Mr Carson’s evidence was relevant to Guo’s case, she should have made arrangements to obtain his evidence well before illness befell Mr Carson;

(2)  Mr Billis’ witness statement was served on Guo on 12 October 2021, probably there remained time for a witness statement to be taken from Mr Carson thereafter.  The evidence is that Mr Carson’s health “deteriorated from in about October 2021” and he “received palliative care from in or about mid-December 2021”;

(3)  It appears that there was at least one important email from Mr Billis to Guo dated 22 April 2014 which may shed some light on the dealings between them.  I do not know from the evidence in this Application if there was any other such document.  It may not be a case where the trial will turn solely upon the oral evidence of Gou and Mr Billis on the issue of their dealings.  The unavailability of Mr Carson’s evidence should be assessed in such light. 

8.  I am, in the premises, not convinced that there is any prejudice to Guo which cannot be compensated with costs.

9.  In respect of the arguments that the pleas sought to be introduced by Amendment are defective and bound to fail, I am unable to agree.  First, there is no merit in the suggestion that the amendments are not adequately pleaded.  If anything, the pleas could be more concisely formulated. 

10.  On the proposition that Xu has the burden, but failed, to plead that restitutio in integrum is possible.  I am not persuaded, having been taken by the parties to a number of authorities, that there is such a burden on Xu.  In particular, it seems to sit with common sense that it is an issue which should be raised by Guo to resist the relief of rescission in the event that the case of misrepresentation is made out against her: see Salt v Stratstore Specialist Ltd [2015] 2 CLC 269, per Longmore, LJ at [19]-[30].

11.  In respect of the attack on the new plea on lack of clean hands, which is said to bar Guo from seeking equitable relief. Assuming that Guo is correct that in order for Xu to succeed the alleged misconduct must have an immediate and necessary relation to the relief sought, it will primarily be a matter of law for the court whether the lack of clean hands can so relate to the relief.  Generally, matters of law should not be pleaded.

12.  Second, none of the arguments on the substantive merits of the new pleas can be said to be clear cut, and should not be entertained for the present purpose.  For instance, whether rescission is available to Xu will depend on the facts as found by the court and whether the court can do “practical justice” on any necessary return of benefit acquired to achieve rescission (see School Facility Management Ltd v Governing Body of Christ the King College [2021] 1 WLR 6129, CA, [39]-[40]).

13.  As regards the argument that the new plea which challenges Guo’s entitlement to sue as only one of two promisees (the other being the 3^rd Defendant) should be raised and determined at the outset and not raised by way of defence, I am inclined to agree with Mr Ho that a valid distinction can be drawn between this case and, eg, Waddington Ltd v Chan Chun Hoo Thomas & Ors, CACV 10/2014, where the challenge was one of authority to sue.  Here, the issue is one of substantive legal entitlement on the part of Guo to sue as only one of the promisees.  I believe that it is one which should be determined at the trial.

14.  I shall hear the parties on costs.