Kojima v HSBC Bank Plc

The power under the Civil Procedure Rules 1998 to revoke or vary an order is not an alternative appeal route. Once a court has finally disposed of a claim or part of it, the public interest in finality generally prevails over grounds applicable to procedural or other non-final orders. A judgment on admissions is a judgment on the merits and attracts that principle. The discretion to withdraw an admission remains broad, but delay and the prejudice of reopening a finally determined claim may be decisive. The court left open whether truly exceptional circumstances could justify reviewing a final order.

HSBC sued Mr Kojima for repayment of a loan. He admitted most of the debt, and a district judge ordered him to execute a charge over his flat or face judgment for the admitted amount. After obtaining legal advice, he sought to withdraw the admission, revoke the order, amend his defence and bring a counterclaim based on alleged misrepresentations and statutory breaches concerning a film investment scheme. HHJ Mitchell dismissed the applications. The appeal concerned the scope of the power to revoke a final order, the withdrawal of admissions, and whether the judge had been misled by the absence of the proposed defence.

1. Appeal dismissed. The applications to withdraw the admission, revoke the district judge’s order, amend the defence and plead a counterclaim remained refused.
2. The discretion to permit withdrawal of an admission under paragraph 7.2 of the Practice Direction to CPR Part 14 requires consideration of all the circumstances, including the grounds for withdrawal, the parties’ conduct, prejudice, the stage of proceedings, prospects of success and the interests of justice. The delay from the admission in 2006 to the application in 2010 justified the conclusion that the balance of prejudice militated against withdrawal.
3. The power under CPR Part 3.1(7) is not an equivalent to an appeal. The alternative grounds identified in Lloyds Investment (Scandanavia) Ltd v Christen Ager-Hanssen [2003] EWHC 1740 (Ch) and approved in Collier v Williams [2006] 1 WLR 1945 operate in the context of procedural or other non-final orders. Once a case or part of it has been finally determined, the public interest in finality generally displaces those considerations. The court followed Roult v North West Strategic Health Authority [2010] 1 WLR 487 in reaching that conclusion.
4. A judgment on admissions under CPR rule 14.3, particularly rule 14.3(2), is a judgment on the merits. It is not equivalent to a default judgment, which has a distinct setting-aside regime under CPR Part 13. The admitted part of HSBC’s claim had therefore been finally disposed of, subject only to appeal.
5. The proposed defence was not fanciful and had a real prospect of success. The possible restitutionary consequences of the statutory remedies did not necessarily mean that Mr Kojima would have to repay HSBC in any event. Those merits did not overcome the finality principle. The question whether exceptional circumstances might justify reviewing a final order was left open, although Independent Trustee Services Ltd v GP Noble Trustees [2010] EWHC 3275 (Ch) was noted.
6. The court also held that adherence to an admission at a hearing did not, in the relevant sense, mean that the judge had been misled about matters relevant only if the admission were withdrawn. The appeal failed on the broader and sufficient ground that finality applied. No argument was heard on limitation issues concerning the proposed counterclaim.

1. High Court (Chancery Division) On appeal, Briggs J dismissed the appeal and upheld the refusal of the applications.
2. Central London County Court HHJ Mitchell dismissed the applications to withdraw the admission, revoke the district judge’s order, amend the defence and plead a counterclaim on 29 July 2010.