SEE WAH FAN v. LIN KWOK PUN AND OTHERS

[English Translation – 英譯本]

HCMP 898/2013

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

MISCELLANEOUS PROCEEDINGS NO. 898 OF 2013

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J U D G M E N T

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Background

1. This is an application by the 1^st defendant to strike out a claim for damages commenced by See Wah Fan (“Madam See”) by way of originating summons. The defendants are, respectively, the chairman, treasurer and secretary of the management committee (“the management committee”) of the incorporated owners of the housing estate (“the housing estate”) in which Madam See resides.

2. Madam See is the owner of a flat together with garden (“the Flat”) on the ground floor of one of the blocks of the housing estate. Tam Kam Yuk (transliteration of 譚金玉) (“Madam Tam”) is the owner of another flat on the second floor, together with rooftop, immediately above Madam See’s flat. Madam See and Madam Tam had a dispute over certain alterations made by Madam Tam to the staircase of that block. Since 1999, Madam See has commenced numerous proceedings in the Lands Tribunal, the District Court, the Court of First Instance and the Court of Appeal against Madam Tam, her tenant and the management committee. In these proceedings, Madam See acted in person and all the other parties were represented by Mr Lee Po Wing (“Mr Lee”) of Messrs Paul Kwong & Co (“PKC”).

3. Madam See was litigious and kept commencing proceedings despite repeated failures. The courts made a number of costs orders against her, but she failed to pay up. In the end, the defendants obtained a charging order absolute on the Flat as well as another flat in Tuen Mun Centre (“the TMC flat”). Madam See still failed to pay costs.

4. On 28 August 2007, Master Roy Yu of the High Court made an order for sale of a charged property, with matters relating to such sale  to be dealt with by PKC,  and ordered Madam See to pay to the defendants the sum of $20,000 being costs of the application.

5. On 19 December 2007, Master Queenie Au-Yeung (as she then was) directed Madam See to deliver the title deeds of the Flat and specified documents to the defendants’ solicitors by 20 December 2007, and also directed that the properties in question were to be put up for auction on or before 16 January 2008 and completion of the sale was to take place on or before 12 February 2008. The auction date was subsequently postponed to 21 January 2008.

6. On 30 January 2008, Madam See bought back the flat for $1,270,000 at the auction. Under special auction clause (2) of the auction contract, she was required to complete the transaction by 29 February 2008. By way of personal cheques, Madam See paid a deposit of $127,000 to PKC and a commission of $20,000 to the auctioneer.

7. On Friday, 1 February 2008, Madam See notified the auctioneer that she had engaged Messrs Au-Yeung, Cheng, Ho & Tin (“AYCHT”)  to handle the sale and purchase agreement of the Flat, and that she urgently needed the auction contract and the deeds relating to the property for the purpose of obtaining mortgage loan from the bank.

8. Madam See did not receive the auction contract and the deeds relating to the property until 5:22 pm on Tuesday, 5 February 2008 (i.e. 29 December in the Chinese Lunar Calendar). Madam See claimed that by reason of the approaching Chinese New Year, the bank was unable to arrange for a mortgage loan for her to pay off the balance of the purchase price. On 28 February 2008, i.e. the scheduled date of completion, upon the instruction of Madam See, AYCHT wrote to Mr Lee seeking an extension of one month to complete the transaction. On the following day, Mr Lee claimed that he accepted Madam See’s repudiation of the auction contract and refused to extend the date of completion.

9. For fear that the defendants would put up the Flat for auction again, Madam See reluctantly sold the TMC flat to pay for the costs. However, the charging order made in the name of the defendants had to be discharged first. That transaction had to be completed by 31 March 2008. AYCHT wrote to Mr Lee on 26 March 2008 to inquire about the amount of money required to be paid for the discharge of the charging order. Although no mention was made of paying off the debt underlying the order for sale of the charged property, as the charging order and the ensuing order for sale involved the same debt, Mr Lee should have understood that such an action would simultaneously remove the basis of the order for sale. However, Mr Lee proceeded to execute the order for sale of the charged property.

10. Mr Lee notified AYCHT on 28 March 2008 that the Flat would be put up for auction again on 16 April 2008.

11. Mr Lee notified AYCHT on 31 March 2008 of the amount required to be paid for the discharge of the charging order. AYCHT paid off that sum of money on 10 April 2008. Mr Lee then called off the re-auction of the Flat.

12. On 15 May 2008, Madam See via AYCHT agreed to pay the defendants $30,000 being legal costs for the termination of the sale and purchase of the Flat. Having deducted this sum of money, Mr Lee still kept a balance of $97,000 on behalf of the defendants. I doubt whether it was reasonable for Mr Lee to seek this item of costs as he did. The termination of the sale and purchase did not require the 1^st defendant to pay any legal costs. It seems that this item of costs was sought not to cover any costs paid by the 1^st defendant but to compensate Mr Lee for his financial loss in the terminated sale and purchase transaction.

13. On the other hand, Madam See commenced proceedings against Madam Tam in the Lands Tribunal (LDBM 175/2003) and the High Court (HCMP 300/2005). In both cases, judgments were entered against Madam See. She appealed to the Court of Appeal against both judgments (CACV 362/2006 and CACV 14/2006 respectively) and the appeals were consolidated and heard together. The Court of Appeal dismissed her appeals on 2 February 2007 and made cost orders against her. Madam See failed to pay. On 26 May 2008, Madam Tam obtained another charging order absolute on the Flat in respect of the costs owed by Madam See.

14. In a letter to AYCHT dated 4 June 2008, Mr Lee suggested deducting the costs relating to the above charging order absolute from the balance of $97,000, and returning the remaining $10,000 to Madam See. Mr Lee also pointed out that if Madam See disagreed, he would have no choice but to resort to legal proceedings again. The reply from AYCHT has not been produced. What is beyond dispute is that Madam See did not [pay] the costs in CACV 362/2006. It should be noted that while the above suggestion was very reasonable, there was indeed no reason for Mr Lee, being the defendants’ solicitor, to continue to keep the sum of money for one year pending the opportunity to offset a debt owed by Madam See to another client of his, i.e. Madam Tam. His conduct caused Madam See to doubt his integrity and raise allegations of conspiracy against him.

15. Madam See did not accept Mr Lee’s proposal. Madam Tam then commenced garnishee proceedings. On 13 May 2009, Master Roy Yu made a garnishee order absolute and ordered the defendants to pay, from the debt they owed Madam See (i.e. the abovementioned $97,000 being the balance of the deposit), to Madam Tam taxed costs of $60,565.33 plus interest and $4,000 being costs of the garnishee proceedings.

16. In the meantime, Mr Lee discovered that Madam See had not paid $20,000 being costs ordered against her in respect of the order for sale of the charged property. That sum could be deducted from the sum of $97,000. After deduction, the defendants actually owed Madam See $77,000. Mr Lee then acted on the garnishee order absolute made by Master Yu and paid to Madam Tam the whole of the balance of $77,000. That accounts for the deposit of $127,000 paid to Mr Lee by Madam See.

17. Four years later, on 26 April 2013, Madam See issued an originating summons against the defendants, accusing them of conspiracy. On 20 June 2013 Louis Chan J made an order granting leave to Madam See to amend her originating summons within 21 days. Paragraph 2 of that order specified that the amended summons must include:

(1)  details of the alleged misrepresentation in respect of the auction contract of 31 January 2008, such details to be listed in point form;

(2)   reasons as to why the alleged misrepresentation caused losses to the plaintiff; and

(3)  details of the alleged losses (including monetary amounts).

18. Madam See filed her amended originating summons on 10 July 2013 but it did not meet the requirements of the above order. On 30 September 2013 Louis Chan J made a further order, of which Paragraph 1 directed that: unless Madam See filed by 4 pm on 15 October 2013 a re-amended originating summons which complied with paragraph 2 of Louis Chan J’s order of 20 June 2013 and the provisions of O. 7 r. 3 of the Rules of the High Court (“RHC”), her originating summons would be struck out automatically after 4 pm on 15 October 2013 without further order.

19. Madam See filed her re-amended originating summons on 15 October 2013. On 17 October 2013 the 1^st defendant applied by summons to strike out Madam See’s re-amended originating summons on the basis that it failed to comply with the requirement set out in paragraph 1 of Louis Chan J’s order of 30 September 2013 (i.e. the requirement stipulated in paragraph 2 of Louis Chan J’s order of 20 June 2013) and  O. 18 r. 19 of RHC. On 24 March 2014, Master Simon Lo ordered that Madam See’s re-amended originating summons be struck out with costs to the 1^st defendant. Madam See now appeals that order.

The provisions of O. 7 r. 3 and O. 18 r. 19 of RHC

20. Given the rules referred to in Louis Chan J’s order and relied on by the defendant in his application, both O. 7 r. 3 and O. 18 r. 19 of RHC are applicable to the present striking-out application.

21. O. 7 r. 3, which provides for the contents of an originating summons, reads as follows:

“(1) Every originating summons must include a statement of the questions on which the plaintiff seeks the determination or direction of the Court of First Instance or, as the case may be, a concise statement of the relief or remedy claimed in the proceedings begun by the originating summons with sufficient particulars to identify the cause or causes of action in respect of which the plaintiff claims that relief or remedy. (25 of 1998 s. 2)

(2)  Order 6, rules 3 and 5, shall apply in relation to an originating summons as they apply in relation to a writ.”

22. The Madam See’s cause of action is one of conspiracy to defraud which involves very serious accusations. In Aktieselskabet Dansk Skibsfinansiering v Wheelock Marden & Co Ltd[1], Bokhary JA (as he then was) pointed out that when it comes to a claim in the tort of conspiracy, the relevant plea must contain the following details. The complainant has to plead at least one overt act which is the act of all the alleged conspirators or, failing that, a number of overt acts which include at least one act on the part of each conspirator. And the overt act(s) pleaded must be such as to show: (i) that the conspiratorial agreement alleged against the defendants had been entered into by each and every one of them; (ii) that the agreement, and not merely the intention of one person alone, was implemented; and (iii) that such implementation caused the plaintiff to suffer the damage complained of.

23. I will adopt the above criteria in considering whether the contents of Madam See’s re-amended originating summons meet the requirements of O. 7 r. 3.

24. Furthermore, the defendant’s striking-out application was made pursuant to O. 18 r. 19, which provides as follows:

“(1) The Court may, either of its own motion or on application, at any stage of the proceedings order to be struck out or amended any pleading or the indorsement of any writ in the action, or anything in any pleading or in the indorsement, on the ground that — (L.N. 152 of 2008)

(a) it discloses no reasonable cause of action or defence, as the case may be; or

(b) it is scandalous, frivolous or vexatious; or

(c) it may prejudice, embarrass or delay the fair trial of the action; or

(d) it is otherwise an abuse of the process of the court;

and may order the action to be stayed or dismissed or judgment to be entered accordingly, as the case may be.

(2) No evidence shall be admissible on an application under paragraph (1)(a).

(3)  This rule shall, so far as applicable, apply to an originating summons and a petition as if the summons or petition, as the case may be, were a pleading.”

25. In considering whether to strike out under paragraph (1)(a), i.e. the originating summons discloses no reasonable cause of action, I will not consider whether there is evidence in the present case to support the allegation of conspiracy or fraud. It suffices for me to consider whether the originating summons provides sufficient details of the allegation and, assuming those details are true, whether the originating summons discloses a reasonable cause of action.

26. When considering whether to strike out under other provisions, I can consider the evidence in the affidavits. I will put more weight on the evidence which is not disputed by the parties or which is indisputable, and such evidence will form the basis on which I assess the credibility of evidence under dispute.

Allegations in the re-amended originating summons

27. The re-amended originating summons runs to nine pages, containing 59 paragraphs. Madam See’s cause of action is one of conspiracy in tort. The principal accusations are set out in paragraphs 2 and 48 which read as follows:

“2. The 1^st defendant and the 3^rd defendant conspired to defraud, so that the three defendants exercised improper selling power in their capacity of vendor by way of misrepresentation. It is because [in accordance with] the court order attached to the auction contract (HCMP 1345/2007 made by Master Roy Yu on 28 August 2007, paragraph 4), Lee Po Wing is the person who should sign the contract on behalf of the vendor. The three defendants should not on their own accord alter the signatory for the vendor [as stated in] the order in HCMP 1345/2007 unless leave of the court to make such alteration had been obtained. This was supplemented by the unfair auction terms, General Terms of Auction clause (12)(c) (the vendor shall not be called upon by the purchaser to produce […] not in the vendor’s custody or possession … no objection or requisition shall be made in respect thereof.), clause (17) (if the vendor, for any reason (except breach of the contract by the purchaser), is unable to complete the transaction in accordance with the terms of this contract … the purchaser shall have no claim against the vendor or the vendor’s solicitors firm …), clause (24)(b)(10) (… together with the name, address and identity card number of each person who receives or is about to receive the said sum …) (this is because the three defendants signed to acknowledge receipt of $127,000 as vendors but, contrary to the terms of the auction contract, next to their signatures there was neither confirmation as to which signature belonged to which defendant nor verification of their identities by way of names in legible handwriting, addresses and identity card numbers), and misrepresentation as to the date of entering into the sale and purchase agreement which does not comply with clause (19) of the General Terms of Auction (the time limits specified hereunder are of the essence) (this is because the signed auction contract produced by Lee Po Wing on behalf of the three defendants was delivered to Messrs. Au-Yeung, Cheng, Ho & Tin (solicitors for the plaintiff) at 5:22 pm on 5 February 2008 (the day preceding 29 December in the Chinese lunar calendar), and the auction contract specified that the sale and purchase agreement was entered into on 30 January 2008 and declared that the property was conveyed on 29 February 2008.”

“48. Viewing the above judicial proceedings and the facts and times shown as a whole, the 1^st defendant and the 3^rd defendant had conspired by dishonest means, with the assistance of Lee Po Wing who, not being a party to the litigation, avoids liability; with the assistance of Lee Po Wing who made an affidavit with misrepresentations (Lee Po Wing’s affidavit dated 5 June 2013 in HCMP 898/2013), [they] detained the auction deposit of HK$127,000 and contravened Item 4 of the order made in HCMP 1345/2007 by Master Roy Yu on 28 August 2007, by way of unfair auction terms, namely clause (12)(c) of the General Terms of Auction (the vendor shall not be called upon by the purchaser to produce or procure the production of […] not in the vendor’s custody or possession … no objection or requisition shall be made in respect thereof). The three defendants signed to acknowledge receipt of HK$127,000 in the capacity of vendors on behalf of Lee Po Wing; using dishonest means, the 1^st defendant and the 3^rd defendant failed to comply with the terms of the auction contract by not producing the auction contract on 30 January 2008 on which it was entered into; using dishonest means, the 1^st defendant and the 3^rd defendant failed to provide their identity card numbers, names and addresses next to their acknowledgement of receipt of the auction deposit of HK$127,000. With the assistance of Lee Po Wing, the 1^st defendant and the 3^rd defendant conspired to damage the interests to which the plaintiff should be entitled under the auction contract.”

28. To sum up, Madam See accuses the defendants of having conspired with Mr Lee to defraud. She relies on the following allegedly fraudulent acts which caused the alleged damage:

(1)  misrepresenting as vendors, signing an auction contract to sell the Flat;

(2)  unfair auction terms;

(3)  misrepresenting the date of formation of the auction contract;

(4)  delaying the delivery of the auction contract signed by the defendants, causing Madam See to sell the Tuen Mun Centre flat at a very low price; and

(5)  detaining the auction deposit of HK$127,000.

29. The remaining paragraphs in the originating summons contain repetitions of the two paragraphs quoted above, narrations of evidence, calculations of the quantum of damages, statements of arguments, as well as allegations unrelated to the allegation of conspiracy to defraud, for example, that the defendants were in breach of the auction contract and that they did not provide their identity card numbers in the auction contract. In short, these accusations are completely groundless and frivolous and stem from misunderstanding of the law or procedure by Madam See. I do not intend to elaborate or deal with them. I shall only deal with the five accusations listed above.

30. Furthermore, Madam See has repeatedly alleged that Mr Lee had no authority to make affidavits on behalf of the defendants and has urged me not to accept his affidavit. Generally speaking, a solicitor may not make affidavits for his client concerning facts under dispute. However, I must point out that Mr Lee is the solicitor for the 1^st defendant. In his affidavit, Mr Lee declared that he had been authorised by the 1^st defendant to make the affidavit in reply to Madam See’s affidavit and that the facts deposed to were within his personal knowledge and were true. In fact, the facts deposed to in his affidavit relate to his handling of this litigation. He has personal knowledge of those facts, most of which are supported by relevant documents and beyond dispute. I see no reason not to accept his affidavit.

(1) Misrepresenting as vendors, exercising improper power of sale

31. Madam See’s principal accusation in relation to fraud is misrepresentation as to the vendor’s identity. She alleges that, instead of Mr Lee signing the auction contract in accordance with paragraph 4 of the order for sale of the charged property, the defendants signed the contract as vendors.

32. Paragraph 4 of the order directs as follows:

“In accordance with s. 25A of the High Court Ordinance, if the defendant refuses to execute all the documents required to assign and transfer the said property to the purchaser, then Mr Lee Po Wing or such person as the Registrar of the High Court may appoint shall execute those documents on behalf of the defendant;”

Paragraph 4 makes it quite clear that it applies only where Madam See refuses to execute all the documents required to assign and transfer the property to the purchaser. In the sale of this type of charged properties, the proper step is for the original property owner to sign the sale and purchase agreement and the assignment. Only when the original property owner does not cooperate will it become necessary to follow the direction in the order for sale of the charged property, i.e. the debtor [sic] or the Registrar or someone appointed by the Registrar will execute the contract. In the present case, the defendants are not alleging that Madam See refused to execute the relevant documents. The provision in paragraph 4 is therefore not engaged.

33. On the day of auction, after Madam See as purchaser signed the auction contract, paid commission to the auctioneer and paid the deposit to Mr Lee, Mr Lee took the contract and subsequently arranged the defendants to sign the auction contract as vendors. It was therefore improper, and an obvious mistake, for the defendants or Mr Lee to sign the auction contract as vendor(s). There were also other procedural errors and omissions that day. For example, the defendants did not provide their names in legible handwriting, addresses and identity card numbers, etc, next to where they put their signatures, as required by the auction contract. Madam See alleges that these were conspiratorial acts between the defendants and Mr Lee. Perhaps the court may draw such an inference from the abovementioned undisputed facts. However, it could possibly or even probably be negligence on the part of Mr Lee. It is not necessary for me to make a finding of fact here. Even if those acts were conspiratorial, Madam See must further prove that she has suffered damage as a result of those acts. She has not set out in her re-amended originating summons how those acts had caused her damage. This allegation therefore lacks sufficient particulars and fails to meet the requirements of both O. 7 r. 3 of RHC and the order of Louis Chan J. This allegation discloses no reasonable cause of action, is frivolous and vexatious, and is otherwise an abuse of the process of the court. It must be struck out pursuant to O.18 r. 19.

(2)  Unfair auction terms

34. Madam See alleges in the re-amended originating summons that the General Terms of Auction that came with the auction contract were unfair. The terms in question include Clauses (12)(c), 17, 19 and 24(b)(10).  They read as follows:

“12(c) The vendor shall not be called upon by the purchaser or be bound to produce any deeds, documents, plans or drafts not in the vendor’s custody or possession nor to produce certified copies of such deeds, documents, plans or drafts nor to disclose details of such deeds or documents and no objection or requisition shall be made in respect thereof.”

“17 If the vendor, for any reason (except breach of contract by the purchaser), is unable to complete the transaction in accordance with the terms of this contract, then the deposit together with all other sums (if any) shall be returned to the purchaser without being liable to pay the purchaser any interest, compensation or charges, and the purchaser shall have no claim against the vendor or the vendor’s solicitors firm or the auctioneer for any damages, costs or expenses incurred as a result of the vendor’s failure to perform the transaction.”

“19 The time limits specified hereunder are of the essence.”

“24(b) (10) Any other sum or value for the execution of or in relation to the sale and purchase agreement or any deed of assignment (excluding legal fees), already known to each and every person who signs the document, paid or obtained or agreed to be paid or obtained from any person, together with the name, address and identity card number or business registration number of each and every person who receives or is about to receive that sum or interests relating thereto.”

35. Madam See alleges that these terms were extremely unfair, in particular clause 12(c). In fact, they are terms commonly found in auctions of so-called “foreclosed properties”, i.e. properties subject to court orders for sale of charged properties. It is often the case in these auctions that the creditor, i.e. applicant of the foreclosure order, is not able to provide the deeds, documents, plans, deeds or drafts etc in respect of the auctioned property because the original owner has absconded to avoid liability to pay debts. For this reason, auctioneers often include such terms in auction contracts to protect the interests of the creditors. It follows that, in an auction of a foreclosed property, the purchaser must bear the risk of defects in the title of the property, and the corresponding transaction price is lower than the market price. In general, such terms are not unreasonable. In the circumstances of the present case, clause 12(c) would not be unfair to Madam See because she was in fact buying back her own property and hence the original title.

36. For the same reason, clause 17, i.e. the exemption clause in case the vendor is unable to complete the transaction, is also commonly found in auction contracts of foreclosed properties and is also fair.

37. The time limits imposed under clause 19 are even more commonly seen in sale and purchase agreements generally. Such terms are also fair.

38. Nor is clause 24(b)(10) unfair in any way. Madam See’s complaint is that the defendants had not complied with this term.

39. In fact, whether these conditions are fair or not is irrelevant because Madam See does not allege why commonly used auction terms designated by a third-party auctioneer could have become acts of conspiracy or evidence of conspiracy between the defendants and Mr Lee. Moreover, in her re-amended originating summons Madam See does not allege how these terms have caused her damage. Therefore, as is the case in paragraph 33 above, this allegation lacks sufficient particulars and fails to meet the requirements of both O. 7 r. 3 of RHC and the order of Louis Chan J. This allegation discloses no reasonable cause of action, is frivolous and vexatious, and is otherwise an abuse of the process of the court. It must be struck out pursuant to O.18 r. 19.

(3)  Misrepresenting the date of formation of the auction contract

40. Madam See’s case is that she signed the auction contract on 30 January 2008 but Mr Lee did not deliver the auction contract, also signed by the defendants, to AYCHT until 5:22 pm on 5 February 2008. With respect, I cannot understand which date is the date of formation of the auction contract she refers to and which date is the date of misrepresentation she refers to. According to established legal principles, the auctioneer represents the vendor, and the moment the auctioneer’s hammer falls is the moment the bidder’s offer is accepted and that becomes the time and date when the contract is formed. That date is, in the present case, 30 January 2008. This date is consistent with the date written on the auction contract, i.e. 30 January 2008, being the date of the auction. The defendants and Mr Lee had therefore not misrepresented the date of formation of the auction contract. I believe that Madam See’s real complaint lies in the next accusation. Even if there had been misrepresentation, this allegation must, for reasons same as those set out in paragraph 33 above, be struck out.

(4)  Delaying delivery of the auction contract signed by the defendants, causing Madam See to sell the Tuen Mun Centre flat at a very low price

41. Madam See’s case is that she signed the auction contract on 30 January 2008 but Mr Lee did not deliver the auction contract, also signed by the defendants, to AYCHT until 5:22 pm on 5 February 2008, i.e. 29 December in the Chinese lunar calendar. Before the auction, the auctioneer did not publicly put up the auction contract in public, and Madam See did not know the completion date was 29 February 2008. I harbor grave doubts about this allegation; but even if it is true, such an arrangement was made by the auctioneer and had nothing to do with conspiratorial acts of the defendants and others. Madam See alleges that, not counting the Chinese New Year holidays, she only had slightly over two weeks to arrange a mortgage loan to pay the purchase price, and that time period was far from sufficient. On the completion date, AYCHT requested an extension of time for one month but Mr Lee did not accede to the request. Madam See alleges that the delay in delivery by Mr Lee of the auction contract signed by the defendants and the refusal to extend time for completing the contract were acts of conspiracy between the defendants and Mr Lee, and that those acts forced her to sell the Tuen Mun Centre flat at a very low price in order to raise money for the discharge of the charging order so as to avoid the Flat being put up for auction again by the defendants.

42. Mr Lee explains that he refused to extend time because AYCHT did not say that an extension of time was needed to arrange a mortgage loan to pay for the purchase. In my view, as time was pressing, the refusal to extend time was unreasonable. However, this question of reasonableness is quite beside the point: the auction contract stipulated that time was of the essence, and therefore the defendants had the right to refuse to extend time.

43. The question is whether I can draw an inference of conspiracy to defraud from the background facts as a whole and the acts of the defendants and Mr Lee. In my view, even if the conduct of the defendants and Mr Lee had been agreed upon between them, such conduct lacked the element of defraud. I also take the view that their conduct was not the reason why Madam See sold the Tuen Mun Centre flat at a very low price. That Madam See was in dire straits was her own problem. It was unwise of her to take part in the bidding as she did without first understanding her obligations under the auction contract, the completion date, her ability to pay as well as making advance planning and preparation. It was these reasons, which had nothing to do with the defendants and Mr Lee, which caused her to sell the Tuen Mun Centre flat at a very low price. For reasons same as those stated in paragraph 33 above, this allegation must be struck out.

(5)  Detaining the auction deposit of HK$127,000

44. In paragraphs 12 to 16 above, against the undisputed background to the present case, Mr Lee has given an account of this sum of money. Although it was in my view unprofessional and unfair for Mr Lee to continue to keep, after the sale and purchase of the Flat had fallen through, the balance of $77,000 for a year pending enforcement by Madam Tam of the garnishee order, and even if the conduct of the defendants and Mr Lee had been agreed upon between themselves, such conduct lacked the element of defraud. Moreover, it was not in any way related to the damage allegedly suffered by Madam See. For reasons same as those set out in paragraph 33 above, this allegation must be struck out.

Conclusion

45. For the above reasons, Madam See’s re‑amended originating summons does not meet the requirements of both O. 7 r. 3 of RHC and the order of Louis Chan J. The statements contained in her summons disclose no reasonable cause of action, are frivolous and vexatious, and are otherwise an abuse of the process of the court. It must be struck out pursuant to O.18 r. 19.  I therefore uphold the Master’s decision striking out Madam See’s re-amended originating summons and dismissing her claim.

46. On the other hand, with respect, I take a different view from the Master’s in respect of costs. Costs are at the discretion of the trial court. According to general legal principles, costs are in the cause, and the appellate court will not normally interfere with the trial court’s discretionary decision. The circumstances of the present case, however, are exceptional, and with respect, the Master erred in principle for not having considered those exceptional circumstances.

47. Madam See instituted legal proceedings for no cause, and this was an abuse of the process of the court. In the normal run of events, she should pay the costs of the winning parties, to be assessed on an indemnity basis. However, the background leading to this action was special. Following protracted argument, the court made an order for the sale of the charged property. Mr Lee executed the order on behalf of the defendants. He put up the Flat, i.e. Madam See’s residence, for sale by public auction in order to satisfy the costs that Madam See owed the defendants. Madam See was cooperative and handed over the title deeds of the Flat, but she wanted to buy back her own flat. Mr Lee knew this was what Madam See intended to do. This being the case, to the parties should have discussed paying off the debt and costs by arranging a mortgage loan from the bank without having to sell the Flat to the highest bidder in a public auction, and then returning the balance to Madam See. Public auction would only push up the costs, exacerbate Madam See’s burden and aggravate the rancour between the parties, and yet Mr Lee could make a profit from a public auction. At the time of the application for an order for sale of the charged property, Mr Lee was not yet aware of Madam See’s intention to buy back the Flat. But by the time of the auction, he already knew that Madam See intended to take part in the bidding. He should have adopted the forgiving and cooperative attitude as mentioned above and sold the Flat back to Madam See by way of private contract and at a sale price sufficient to pay off the debt and all the costs. Against this background, I cannot approve of Mr Lee’s conduct.

48. However, I think the most condemnable act of Mr Lee was that he unreasonably refused to extend time for Madam See to complete the auction contract so as to enable her to arrange a mortgage loan. The explanation offered by Mr Lee is that AYCHT did not tell him that Madam See needed time to arrange a mortgage. But this was self-evident. Furthermore, there were only 30 days between the auction and the completion of the auction contract, and it took Mr Lee six days to deliver the signed contract to AYCHT. Discounting the Chinese Lunar New Year holidays, Madam See was given no more than slightly over two weeks to go through the formalities of applying for a mortgage. This being the case, it was unreasonable to refuse to extend time. What is more, Mr Lee rubbed salt into the wound by hastily arranging another auction of the Flat when he learnt that Madam See intended to sell the Tuen Mun Centre flat in order to pay off her debts so as to have the charging order and the ensuing order for sale discharged! At that time, his clients were holding the order for sale in one hand and a deposit of $127,000 in the other. They were bound to win. On the date of completion in respect of the Tuen Mun Centre flat, his clients would certainly be repaid all the money owed to them. However, Mr Lee was relentless and intended to put up the Flat for auction again before that completion date. It seems Mr Lee did so for the sole purpose of increasing Madam See’s costs burden and to make profit for himself. Although Madam See had no one but herself to blame by instituting groundless legal proceedings, abusing the process of the court and stubbornly refusing to pay costs after losing, the “vendetta” manner in which Mr Lee executed the cost orders aggravated the antagonism between Madam See and his clients. His conduct was utterly unprofessional, went against the ethics of a solicitor, and reflected badly on the comportment of a solicitor  as an officer of the court. Such practice must not be encouraged. I hope Mr Lee will learn his lessons from the present case.

49. In addition, for the present hearing, Mr Lee’s affidavit and skeleton submissions focus only on explaining the handling of the $127,000 deposit and do not make any statement in response to Madam See’s allegations of conspiracy to defraud or the adequacy of the contents of her re-amended originating summons. As such, his affidavit and skeleton submissions were of no assistance to me in determining the present appeal. The appeal bundle was sloppily prepared, with documents missing therefrom and without an index.

50. In light of the above considerations, I am of the view that although Madam See instituted groundless legal proceedings and abused the process of the court, they were caused by Mr Lee’s conduct which included  the execution of the cost orders in a “vendetta” style (as explained in paragraph 48 above), the improper retention of the balance of the deposit pending execution of a garnishee order absolute by his client in another case (as stated in paragraph 16 above), and the possibly improper billing of legal costs in relation to the termination of the sale and purchase of the Flat (as described in paragraph 12 above). Mr Lee’s conduct was the main cause of the present litigation. The defendants must bear full responsibility for Mr Lee’s conduct and should not be awarded costs. Accordingly, I set aside the Master’s costs order and substitute therefor an order that each party is to bear his/her own costs including all reserved costs.

51. In conclusion, it is my judgment that part of Madam See’s appeal is allowed in part, with each party to bear his/her own costs of this appeal.

52. I would also like to convey the following message to Madam See. Litigation is not child’s play and entails costs consequences. In general, litigation should be left to professional lawyers for handling. Even if one is to conduct litigation in person, one should first seek legal advice and should not commence legal proceedings unless there is prospect of success. Madam See has instituted legal actions against different people at all levels of court concerning related subject matters. In the past ten-odd years, the courts handed down almost 50 judgments regarding her legal actions. She engaged in legal battles despite repeated failures and has incurred significant losses in terms of costs. It is high time for her to put these court proceedings to an end so that she can free herself from all the hassle and make peace with her neighbours. It is always wiser to enjoy one’s life in leisure than to run about in the labyrinth of litigation and bear the brunt of legal costs.

Translated by the Judgment Translation Unit of the Judiciary and vetted by Mr. Edmund Cham, Solicitor.