WONG KWOK HUNG v. ATTORNEY GENERAL

1989, No. A3064

IN THE SUPREME COURT OF HONG KONG

HIGH COURT

__________

______________

JUDGMENT

______________

1. By a summons dated 14th June 1990, the Attorney General seeks to strike out the statement of claim endorsed on the Writ under Order 18 rule 19 of the Rules of Supreme Court on the ground that it discloses no reasonable cause of action. The alternative ground of abuse of process is also relied upon.

2. Whether or not the Plaintiff has a remedy in this case the facts disclosed do give cause for concern as the following chronology and sequence of events will show.

3. The Plaintiff is, inter alia, the holder of an amusement game centre licence granted by the Commissioner for Television and Entertainment Licencing (the Commissioner) in respect of premises of 13 Elgin Street, Central, Hong Kong.

4. Prior to 22nd October, 1987 the Plaintiff was minded to open and operate another games centre at Smithfield Road, Sai Wan. He found premises for this purpose and he agreed with the proposed landlord that a tenancy agreement would be entered into within six months.

5. On 22nd October 1987 the Plaintiff applied to the Commissioner for a licence under the Miscellaneous Licences Regulations made pursuant to the Miscellaneous Licences Ordinance, Cap. 114.

6. On 3rd February 1988 the Commissioner wrote to the Plaintiff in the following terns which I quote from paragraph 5 of the Statement of Claim :

Paragraph 6 of the Statement of Claim states as follows:

"The Commissioner emphasized in the said letter that the premises must be ready for inspection on or before 3rd August 1988. It was further emphasized in the said letter that the requirements mentioned in paragraph 5(a) must be met to the satisfaction of the Director of Urban Services"

7. Paragraph 7 of the Statement of Claim states as follows:

"The said letter in its material and ordinary meaning meant and was understood to mean that the Plaintiff should invest extensive capital expenditure on the said premises in order to comply with the requirements and conditions mentioned in paragraph 5(a) hereof to the satisfaction of the Commissioner and of the Director of the Urban Services; and that a licence would be granted if all the said requirements and conditions are satisfied."

8. Paragraph 8 of the Statement of Claim alleges that when the Commissioner wrote the letter of 3rd February 1988, he intended or well knew or ought to have known that the Plaintiff would rely thereon and be induced to invest extensive capital in order to comply with the requirements and conditions set out in the letter. Paragraph 9 alleges that the Commissioner was under a duty to take care in the making of the representation.

9. Paragraph 10 alleges that the Plaintiff, acting on the faith of these representations was induced to spend $228,000 on air conditioning, decorations etc.

10. Paragraph 11 alleges that the Plaintiff complied with the terms of the letter of 3rd February 1988 and submitted all requested particulars to the Commissioner in March 1988.

11. Paragraph 12 alleges a breach of duty and/or negligence against the Commissioner in making the said representations that is the ones allegedly contained in paragraph 7 of the Statement of Claim. In essence, it is being alleged that the breach of duty and/or negligence consisted in not ascertaining the views of local residents and not telling the Plaintiff thereof before he incurred the alleged expenditure.

12. Paragraph 13 alleges that the misrepresentations were inaccurate and misleading in that the views of local residents play an important role in assessing the granting of a licence.

13. On 17th June 1988 the Commissioner, for the first time, notified the Plaintiff that objections had been received from local residents and on 1st August 1988 the Commissioner refused to grant a licence on the grounds that such refusal was expedient in the public interest [see Regulation 7(1)(h)].

14. The Plaintiff alleges that the Commissioner received local objections before the 10th of June 1988 and if he had so informed the Plaintiff then the Plaintiff would not have entered into the tenancy agreement which he did on that very date.

15. It is then alleged that it was an express term of the said tendency agreement that the Plaintiff should use the premises exclusively for the purposes of a games centre and that by reason of the refusal of the licence the Plaintiff could no longer use the premises for such purposes and he surrenderred the premises on 20th March 1989 after all fixtures and fittings therein had been dismantled. In paragraph 18 of the Statement of Claim it is alleged that in consequence of the matters aforesaid the Plaintiff suffered loss and damage in a sum of $542,668.32.

16. Mr Y M Liu, Crown Counsel for the Defendant, referred me to a number of authorities in the area of Public Law. At the end of the day it was conceded by him that if the Plaintiff could bring his case within the principles adumbrated in the case of Hedley Byrne v. Heller (1964) A.C. 465 then the Plaintiff would have a cause of action not amenable to this strike out. There was a considerable amount of discussion about what would have happened or what might happen if the Plaintiff made an application for judicial review under Order 53 of the Rules of the Supreme Court, but no such application has been made nor says Mr Petrus Chan, is one at the moment contemplated. Therefore, I have to approach this strike out on the simple basis that it is either a Hedley Byrne case or it is not. If it cannot be a Hedley Byrne case that it must be struck out.

17. When the Commissioner stated that he would give further consideration to the issue of a licence he was not misrepresenting the position at all. He did subsequently give further consideration to the issue of the licence and refused to grant it. He stated that he would give further consideration subject to certain conditions. I do not take that to mean that if the conditions were fulfilled then a licence would be granted automatically. It must mean that the further consideration was subject to compliance with those conditions.

18. The crux of this case is whether the words pleaded from the letter can possibly give rise to the meaning attributed to them by paragraph 7 of the Statement of Claim. I say this because paragraphs 12 and 13 of the Statement of Claim are posited on the basis that the letter of 3rd February 1988 did in fact contain and/or amount to the representations set out in paragraph 7 of the Statement of Claim.

19. Implicit in paragraph 7 of the Statement of Claim is the allegation that by the said letter the Commissioner was representing that a licence would be granted if all the said requirements and conditions were satisfied. I find this an impossible proposition to accept because under regulation 7(1)(h) of the Miscellaneous Licences

Regulations the Commissioner may refuse to grant a licence.

"To any person or in respect of any premises if such refusal or revocation in his opinion the expedient in the public interest."

20. By saying that, if certain conditions are fulfilled he would give further considerations to the grant of the licence it cannot be taken to mean that he had already completely or partly considered the public interest as he was by the regulations required to do.

21. The negligence pleaded and the misrepresentations alleged only get off the ground if the letter of 3rd February 1988 bears the meaning attributed to it by paragraph 7 of the Statement of Claim.

22. I begin by reminding myself that this is a strike out summons and that I should only accede to it if I am satisfied that this is a plain and obvious case that there is no reasonable cause of action pleaded. I also take into account Mr Chan's submission that the construction of the letter of 3rd February 1988 is essentially a method for the trial judge. However, in my judgement the construction has to meet a certain threshold before it is allowed to go to trial. I also take into account that the Plaintiff was obliged to spend money as a result of the terms of the said letter and in the events that have happened that money was wasted.

23. I have the greatest sympathy for the Plaintiff for the predicament in which he finds himself. However, having given this matter the most careful and anxious consideration I feel compelled to find that no reasonable cause of action is pleaded. The statement that further consideration would be given to the issue of the licence was true and I do not think that the Plaintiff can establish the construction for which he contends in paragraph 7. If I thought it was arguable, I would have let the matter go to trial. But I am satisfied that it is unarguable and the cause of action falls with the construction.

24. I said at the outset of this judgment that the facts give rise to concern. Although I accept the Plaintiff had obtained a previous licence and may be taken to know the procedure adopted by the Commissioner, nevertheless, the procedures and words used in the documents in question are misleading. It would have been so simple for the letter to make clear that no assurance whatsoever was being given that the licence would be granted even if the conditions were complied with. Had this been done the Plaintiff would have been able to make a reasoned commercial decision as to whether he wanted to spend the money. Alternatively, he could have made enquiry of the Commissioner relating to whether or not the public interest had yet been considered. It seems plain to me that the Plaintiff has been misled, albeit innocently and in good faith, and I can well understand what prompted the Plaintiff to seek redress by firstly his appeal to the Governor-in-Council against the refusal of the licence and secondly by these proceedings themselves.

25. It is not always possible to find a legal peg upon which to hang every complaint however justified that complaint might be. I regret, however, that the Plaintiff has failed to plead a reasonable cause of action. It follows Btherefore that the relief sought in the summons has to be granted. Whether the Plaintiff has any other avenue of complaint for the grievance, which I am sure he strongly feels, is a matter for he and his legal advisers.

Costs

26. At the end of tile argument I heard Counsel on costs.

27. The writ with the Statement of Claim endorsed thereon was dated 12th June 1989. The defence was filed on 12th September 1989 and the reply on the 7th November 1989. A summons for direction was taken out on 29th November 1989 and an order made thereon on 18th December 1989. Discovery followed in January 1990. The Plaintiff served a hearsay notice on the 20th November 1990. The Defendant served a counter notice in May 1990 and the summons to strike out was dated 14th June 1990.

                Costs would normally follow the event. However, Mr Liu for the Attorney General properly conceded that the summons to strike out should have been taken out much earlier and before substantial costs had been incurred by the Plaintiff. He suggested that if he was successful in this summons he should only be awarded half of the taxed costs. Had this summons been taken out as soon as the Attorney General received the Statement of Claim, as clearly it should have been, then the Plaintiff would not have incurred all the costs that he has. To require him now to pay even one half of the Attorney General's costs is in my view grossly unfair. In my judgment the justice of the case requires, and in the exercises of my discretion on costs I order, that there be no order as the costs on the Attorney General's summons to strike out or in relation to the action.