Kojima v HSBC Bank Ltd

Permission to withdraw a civil admission is a discretionary, multi-factorial decision. The court must consider all the circumstances, including new evidence, the parties’ conduct, prejudice, the procedural stage, prospects of success and the interests of justice. An admission formally recorded in a court order is an important feature under the stage factor. Appellate courts must respect the first-instance evaluation and avoid substituting their own judgment unless there is an error of principle or no reasonable judge could have reached the decision. A partial admission remains effective where the claimant does not accept it in satisfaction of the whole claim; the court may still give judgment on it following an application and judicial decision.

In 2003, Kojima borrowed the full amount required to invest in a tax-efficient film partnership scheme. When the expected tax rebates were not paid, HSBC demanded repayment. In 2006, Kojima admitted owing £158,875 while disputing the balance. In 2009, a deputy district judge made an unless order under which HSBC would be entitled to enter judgment unless Kojima provided a charge securing the admitted sum. Kojima executed the charge.

In 2010, he applied to withdraw his admission, revoke the order, amend his defence and bring a counterclaim based on alleged misrepresentations and statutory liability. HHJ Mitchell refused the application, and Briggs J dismissed the first appeal on 22 March 2011. The central issues were whether permission should be given to withdraw the admission, whether the order could be revoked or varied, and whether the admission ceased to have effect because HSBC had not accepted it in satisfaction of the whole claim.

1. Disposition. The appeal was dismissed. The order did not itself enter judgment for the admitted sum. It recorded Kojima’s admission and provided for judgment if the charge was not supplied. Since the charge was supplied, the principal issue was whether the admission could be withdrawn.
2. Withdrawal of admission. Under Civil Procedure Rules 1998 Part 14.1(5) and Practice Direction 14 paragraph 7.2, permission to withdraw an admission requires consideration of all the circumstances. HHJ Mitchell correctly considered the absence of new evidence, Kojima’s knowledge of the material facts, his choice not to obtain legal advice, the benefit obtained through the charge, the prejudice to both parties, the early stage of the related Chancery proceedings, and the substantial delay before the application. The interests of justice favoured refusal because withdrawal would require investigation of events occurring in 2003. The admission’s formal recording in a court order was an important circumstance falling within the stage factor in paragraph 7.2(e). It reinforced the refusal. It was therefore unnecessary to decide whether Civil Procedure Rules 1998 Part 3.1(7) imposed additional restrictions on varying or revoking the order.
3. Appellate restraint. The decision under Part 14.1(5) was a multi-factorial value judgment. An appellate court should not substitute its own assessment unless the first-instance judge went wrong in principle. Lord Neuberger added that intervention required a material misdirection, disregard of a relevant matter, reliance on an error, or a decision no reasonable judge could have reached. The second appeal faced an especially high hurdle because Briggs J had already upheld HHJ Mitchell’s decision. Sir Stephen Sedley explained that finality and justice were not opposed: finality formed part of the interests of justice. This approach was consistent with Ras Behari Lal v King Emperor [1933] 60 Indian Appeals 354.
4. Partial admission. The new jurisdiction point was wrong. The Civil Procedure Rules 1998 provide administrative routes for judgment where the whole claim is admitted or a part admission is accepted in satisfaction of the whole claim. Where the claimant does not accept the admitted sum in that way, the proceedings continue, but the court may still give judgment on the admission following an application and judicial decision under Part 14.3. The admission does not cease to have effect. The deputy district judge therefore had jurisdiction. The court did not determine whether Kojima could raise his proposed defence to the balance of the claim in other proceedings.

• Court of Appeal (Civil Division) [2011] EWCA Civ 1709: the second appeal was dismissed.
• High Court, Chancery Division: Briggs J dismissed Kojima’s appeal from HHJ Mitchell’s refusal on 22 March 2011.
• County Court: HHJ Mitchell refused the applications on 29 July 2010. Earlier, on 10 June 2009, a deputy district judge made the unless order requiring a charge to secure the admitted sum.