YUNG TAI YIN v. CHAN YUEN TUNG AND ANOTHER

HCPI 1225/2014

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

PERSONAL INJURIES ACTION NO 1225 OF 2014

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DECISION

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I. INTRODUCTION

1. On 25 November 2014, the plaintiff (“P”) commenced the present action to claim against the 1^st defendant (“D1”) and the 2^nddefendant (“D2”) for damages for personal injuries in the sum of HK$34,713,000, interest and costs. P and D1 were unrepresented.

2. There was no dispute that (a) D2 was/is a company listed on the stock exchange of Hong Kong, and (b) D1 was a former director of D2 having resigned his directorship on 2 February 2012.

3. In P’s Statement of Claim filed on 10February 2015 (“SoC”), P claimed inter alia that:

(a) On 6 September 2012, P attended hearing at court no48 at the District Court to claim against D1 under costs orders made by DJ Mimmie Chan (as she then was) on 17November 2010 and 11 November 2011. D1 committed battery against P as he left the courtroom and P retreated inside the courtroom to make a complaint, and then D1 again committed battery against P when he again tried to leave the courtroom (“Incident”). P claimed he suffered personal injuries, and his spectacles and watch were damaged as a result of the Incident.

(b) P claimed his cries alerted the courthouse security guards, and a report was made to the police. P was taken to hospital in a police vehicle for medical assessment and treatment. Thereafter, D1 falsely alleged he was assaulted by P. Since the police had not yet made full investigation, they took a statement from P at the detention cell, took his finger/palm prints, and released him on police bail at $500 recognizance at about 2:00 am.

(c) P claimed he had never been involved in any physical fight or police arrest, and never had his finger/palm prints taken. The Incident caused him severe psychological trauma, and he felt he had shamed his family as a result of the treatment he received at the police station as if he were a suspect.

(d) Upon police investigation, D1 was arrested and charged, and the case was tried and D1 was convicted at Eastern Magistracy on 21 September 2014 (should be 20September 2012).

(e) Since then, P suffered psychological stress and injury, which required medical treatment and hospitalisation. He was also prescribed psychiatric medication, which he had to consume on daily basis. As a result, P was unable to work and suffered loss and damages, including cancellation of an agreement between P and 香港數碼印有限公司 in December 2012, and termination of his appointment as China consultant by a Malaysian company Leverage3 International Limited on 23 July 2013.

4. Paragraph 4 of the SoC (“Paragraph 4”) pertained to D2, and it would be useful to set it out in full:

“[D2]在2010至2012年間慫恿,教唆時任公司主席[D1]和執行董事周志剛於區減法院內多次恐嚇毆打[P],警告[P]不許向外畀透露[D2]收購國內企業的內幕,並要求[P]撤銷其在高等法院對[D1]關於HCA650/2010之申索,導致[P]在此2012 年9月6日遭受[D1]襲擊,患上情緒病而造成之人身傷害負有不可推卸的責任。”

5. P annexed 5 documents to the SoC, ie

(a) an application by the police for binding over D1 dated 20September 2013, which stated that “[both P and D1] agreed to have the case [ie the Incident] dealt with by means of bind-over. In view of the minor injuries sustained by [P] and [D1’s] remorseful attitude, application is hereby made to bind over [D1] to keep peace and to be of good behaviour by abstaining from using violence or committing or attempting to commit any criminal act involving the use of violence or threat of violence against any person or property”;

(b) a certificate of trial dated 20 May 2013 showing that in ESMP001658/2012 the learned magistrate bound over D1 for 12 months (no conviction) with fine of $1,000 on 20September 2012;

(c) a letter from the police dated 30 October 2012 advising P of inter alia the result of the aforesaid application;

(d) a letter of referral dated 6 November 2012 by Sai Wan Ho Family Medicine Specialist Clinic to the Department of Psychiatry of Prince of Wales Hospital for psychiatric assessment and treatment for P;

(e) notice of termination of appointment addressed to P by PaulKuan on behalf of the board of directors of Leverage3 International Limited.

6. D1 filed his Defence on 11 September 2015. Although D1 signed the Defence and the accompanying statement of truth as “陳遠東第二被告人 (無律師代表)”, I have no doubt that the reference to “第二被告人” was a clerical error and D1 should be the 1^st defendant. D1 made the correction to “第一二被告人” on the backsheet of the Defence, and even a cursory reading of the contents of D1’s Defence plainly showed it was his personal Defence and not that of the D2.

7. D2 took issue over Paragraph 4. On 23 March 2015, D2 filed a summons to strike out P’s claims against it (at Paragraph4) with costs (“Summons”) under Order 18 rule 19(b) and (d) of the Rules of the High Court (“RHC”) and the inherent jurisdiction of the court. In short, D2 asserted that P’s claims against it were frivolous and/or an abuse of the process of the court.

8. D2 filed the 1^st and 2^nd affirmations of its Chief Financial Officer MakWingChun (“Mak”) on 23 March and 12August 2015 (“Mak 1^st and 2^nd Affs”) in support of the Summons. P filed his 1^st and 2^ndaffirmations on 4 May and 7 September 2015 in opposition (“P 1^st and 2^nd Affs”).

9. The Summons was heard on 14 September 2015 (“Master Hearing”). On the same day, Master Leong ordered that (“Order”):

(a) the claims against D1 (at Paragraph 4) be struck out;

(b) liberty for P to apply to amend the SoC and to re-add D2 as needed within 63 days from the date thereof, ie on or before 16 November 2015;

(c) costs of and occasioned by the Summons be to D2;

(d) D2 do within 7 days from the date thereof file and serve a statement of costs, ie on or before 21 September 2015;

(e) P do, if so advised, file and serve the objections within 28days thereafter, ie on or before 19 October 2015;

(f) assessment of the costs to be done on paper.

10. On 29 September 2015, P filed Notice of Appeal to set aside the Order and for leave to appeal out of time (if the time for doing so had expired) (“Appeal”). On the same day, P filed his 3^rd affirmation in support of the Appeal (“P 3^rd Aff”) without any application for leave of the court or consent by D2. The Appeal was scheduled to be heard before me on 27 October 2015 (“Appeal Hearing”).

II. PRELIMINARY MATTERS

11. Order 58 rule 1(3) of the RHC provides inter alia that unless the court otherwise orders, the notice of appeal against a master’s decision or order must be issued within 14 days after the decision or order appealed against was given or made. P’s Notice of Appeal issued on 29September 2015 was 1 day out of time. Under the proviso “unless the court otherwise orders” in Order 58 rule 1(3) of the RHC and pursuant to Order 3 rule 5 of the RHC, the court has a discretion to grant enlargement of time to appeal.

12. In Postwell Ltd v Cheng Kap Sang [2004] 2 HKLRD355, 364, DHCJ Wong Yan Lung SC stated that:

“…… Although I agree with Hartmann J that the absence of an acceptable explanation for the delay does not preclude the court’s discretion to extend time, I am of the view that in applications for extension of time to appeal an adverse order or adjudication, as opposed to extension of time to remedy other procedural default, the court should be slow to accede to the application in the absence of an acceptable reason for the delay.”

13. In considering whether to extend time to appeal, the court has to consider all relevant factors, particularly: (a) the length of the delay; (b)the reasons for the delay; (c) the merits of the proposed appeal; and (d)the degree of prejudice to the other party (see Postwell Ltd at p363 and Menno Leendert Vos v Global Fair Industrial Ltd & Ors HCMP796/2010, Cheung and Kwan JJA (unreported, 21June 2010) at para16).

14. DHCJ Peter Ng SC (as he then was) in Hady v Bazar [2012] 3 HKLRD29, 41 reminded that in the post Civil Justice Reform era, it is incumbent on the court to give effect to the underlying objectives of the RHC when exercising any of its powers (see Order 1A rules1 and 2 of the RHC), but the court must always recognise that the primary aim in exercising the powers of the court is to secure the just resolution of disputes in accordance with the substantive rights of the parties (see Order1A rule 2(2) of the RHC).

15. Whilst recognising that P was self-represented, I note he had not offered any reason for the delay. Nevertheless, the lack of any satisfactory reason for the delay is only one factor to be taken into account in the exercise of my discretion. Given the delay of only 1 day, Iam not persuaded it would cause any prejudice to D2 (and MrChain, counsel for D2, did not suggest otherwise). Thus, the primary consideration in the exercise of my discretion is to secure the just resolution of the dispute between the parties, and I grant leave for P to appeal against the Order out of time.

16. Next, D2 objected to the P 3^rd Aff. Upon re-consideration at the Appeal Hearing, Mr Chain informed this court that D2 only objected to paragraphs 5-7 of and the exhibit to the P 3^rd Aff, and would withdraw its objection to paragraphs 1-4 of such affirmation.

17. Order 58 rule 1(5) of the RHC provides that “[no] further evidence (other than evidence as to matters which have occurred after the date on which the judgment, order or decision was given or made) may be received on the hearing of an appeal under this rule except on special grounds”. The phrase “special grounds” is the same expression as in Order59 rule10(2) of the RHC and requires the conditions laid down in Ladd v Marshall [1954] 1WLR1489 to be satisfied (see Fortis Insurance Company (Asia) Limited v Lam Hau Wah Inneo HCA1840/2009, FokJ (as he then was) (unreported, 30 Mach 2010) affirmed on appeal in CACV86/2010, KwanJA and SakhraniJ (unreported, 28October 2010), and Falcon Insurance Company (Hong Kong) Limited v Flagship Underwriting Management Limited HCA312/2010, SakhraniJ (unreported, 22December 2010)). The Ladd v Marshall conditions are: (a) the evidence could not have been obtained with reasonable due diligence for use at the hearing below, (b) the evidence must be such that, if given, it would probably have an important influence on the result of the case, though it need not be decisive, and (c) the evidence must be such as is presumably to be believed.

18. D HCJAu-Yeung (as she then was) in Bank of China (Hong Kong) Limited v Certain Aim Limited HCMP1272/2007 (unreported, 4October 2010) at paragraph 17 said as follows (see also Falcon Insurance Company (Hong Kong) Limited at para 15):

“… Order 58, rule 1(5) was introduced to curb the undesirable practice before the Civil Justice Reform when parties sought to adduce a further round(s) of evidence on appeal after an unfavourable decision from a Master. Rule 1(5) aims at effecting a change of culture so that parties should prepare their application properly at the earliest possible opportunity and lay all cards on the table prior to the hearing before a Master. The spirit of this rule will be defeated if a party is allowed to revert to the pre-CJR practice. …”

19. Having considered the contents of paragraphs 5-7 of and the exhibit to the P 3^rd Aff, I find it contained new factual assertions and document not found in the P 1^st and 2^nd Affs. Further, the matters raised therein were not “matters which have occurred after the date on which [the Order] was given or made”. P did not apply for leave of the court to rely on the P 3^rd Aff for the purpose of the Appeal, and did not put forward any “special grounds”. Still further, P insisted on proceeding with the Appeal at the Appeal Hearing, so D2 would not have the opportunity to respond to the matters raised in paragraphs 5-7 of and the exhibit to the P 3^rdAff. In the circumstances, P conceded at the Appeal Hearing that he would not rely on paragraphs 5-7 of and the exhibit to the P 3^rd Aff. So at the Appeal Hearing, I directed that leave be granted for P to rely on the paragraphs 1-4 of the P 3^rd Aff for the purpose of the Appeal.

20. Next, D2 filed a summons on 22 October 2015 for leave to adjourn the Appeal scheduled to be heard before this court at the Appeal Hearing to a date to be fixed in consultation with counsel’s diary with costs reserved (“Adjournment Summons”). On the same day, D2 filed the affirmation of the trainee solicitor of D2’s solicitors, AuTinChi Adrian, in support of the Adjournment Summons.

21. D2 complained that since P unilaterally fixed the Appeal Hearing at short notice without informing D2, it was impossible for D2 to arrange for a transcript of the Master Hearing to be obtained in time. It is trite that an appeal from the master to judge in chambers is dealt with by an actual rehearing of the application which led to the order under appeal, and the judge treats the matter as though it came before him for the first time. But D2 suggested that although the judge is in no way bound by the previous decision of the master, he will give the weight it deserves to such previous decision (see Hong Kong Civil Procedure2016 Vol1 para58/1/2 at p1068), and that the reasoning by MasterLeong for the Order would be of persuasive value for the purpose of the Appeal.

22. P opposed the application, and expressed concern that if the transcript of the Master Hearing would be helpful to D2’s case, then it might be prejudicial to him, and he insisted on proceeding with the Appeal at the Appeal Hearing without such transcript.

23. At the Appeal Hearing, I dismissed the Adjournment Summons and reserved my reasons for decision which I now give. As explained above, the Appeal would be by way of re-hearing. Mr Chain had prepared full written submissions for the Appeal, which submissions were in substance similar to those he used before Master Leong. The absence of the transcript of the Master Hearing would not have affected D2’s deployment of legal and other arguments, and I am unable to perceive any prejudice to D2. In all the circumstances, I am satisfied the Appeal could fairly be argued by both P and D2 even without such transcript, and I therefore refused the adjournment sought.

24. I now make a costs order nisi that there be no order as to costs in respect of the Adjournment Summons. Although I declined to adjourn the Appeal, D2’s application was made not because of any delay or defect of D2’s case but by the time required to obtain the official transcript of the Master Hearing from the court. I am not persuaded that I should order D2 to bear costs.

25. Consequent upon dismissal of the Adjournment Summons, MrChain confirmed he would not rely on any reference in his written submissions to the reasoning by Master Leong for making the Order.

III. P’s AFFIRMATION EVIDENCE

26. P claimed that D2 “多年前利用[P]在國內洗黑錢及在香港股票市場造市的行為被[P]發現及拒絕後”, D2 feared P would disclose such matters to others, so during 2010-2012, Chiau Che Kong (“Chiau”) (who was then D2’s executive director) “在多個場合,包括勞資審裁處、區域法院、[D2’s]辦公室等地方向[P]威脅和恐嚇[P]之人身安全時,聲稱“我都係同公司做野啫”, “公司要我咁做嘅”,這些言論証明[D2]有‘慫恿’和‘教唆’的事實。而[Chiau]的行為亦是代表[D2]而做的”. P reminded that in the judgment handed down by L Chan J on 17August 2015 in HCA650/2010 (“Judgment”), the learned judge “沒有否定[D1]和[D2]存在“洗黑錢”和“造市”的行為,而且[P]在該案件仍在上訴中”.

27. P reiterated that 2-3 years before D1 resigned as then chairman of D2 in February 2012, D1 and Chiau (D2’s then executive director) “不斷在勞資審裁處、區域法院內恐嚇和威脅[P’s]之人身安全”, and D1 being the chairman of D2 assaulted/injured P at the District Court in September 2012, and he was eventually convicted.

28. P said most of the contents of the Mak 1^st Aff were untrue:

(a) Although D1 resigned in February 2012, it was in 2010‑2012 that D1 “代表[D2]任主席時對[P]威脅和恐嚇”. Further, D2’s written submissions hid the fact that both before and after D1 resigned he was the major shareholder of D2.

(b) D2 in filing his Defence just before the Master Hearing “正正顯示[D1]是根據[D2]的指示而配合,也表明[D1]是為了[D2]的利益出發,最終導致[P]患上情緒病的”.

(c) In/about 2010-2012, Chiau “多次在勞資審裁處、區域法院、向[P] 威脅和恐嚇”, but P did not say Chiau was present at the time of the Incident in September 2012.

(d) In fact, in HCA650/2010, P with leave of the court issued a subpoena to call Chan Yuk Foebe (“Chan”) (then director and now chairperson of D2, and also D1’s then live-in girlfriend) to give evidence at trial to “証明[D1]和[P]之僱傭關係及[D2]在國內洗黑錢之事宜”, but the subpoena could not be successfully served. D2’s present chairpersonChan “對上述二人[ie D1 and Chiau]之行為亦知情”. In fact, D2’s then chairman D1 and executive director “都有代表[D2]威脅和恐嚇[P],導致[P]患上情緒病”.

(e) Although Mak suggested there was no relationship between P and D2, paragraphs 85-88 and 98 of the Judgment analysed and held that “D2提供資金超過5,000萬給[D1],然後再多用一億元來購買[P]代[D1]持有的BVI公司,[D1]因此而獲利超過一億元”. Further, in paragraph115 of the Judgment, L Chan J pointed out “[P]是按[D1]的指示去三間證券行開戶口為[D1]買賣[D2]的股票,也可證明[D2]是和[P]有關聯的”.

(f) D2 “為了本身利益,作出‘慫恿’和‘教唆’公司主席、執行董事對[P]恐嚇、傷害因而患上情緒病,同樣地[P]為了自身的權益,而向[D2]進行申索。綜合而言,[P]對[D2]絕不是胡亂指控,而是有事實根據”.

29. P further complained that D2 provided him with the hearing bundle only at the Master Hearing. Although Master Leong gave P the choice of adjourning the hearing of the Summons, P was concerned it would waste the court’s time and agreed to defer the hearing to the afternoon. But in fact P did not have sufficient time to understand and respond to Mr Chain’s then written submissions.

IV. D2’s AFFIRMATION EVIDENCE

30. Mak noted that P’s pleaded claims against D2 were that (a) P suffered injuries and loss as a result of the Incident on 6September 2012 whereby D1 allegedly assaulted P, and (b) D2 was personally responsible for the Incident because D2 had expressly directed and authorised (i) D1 to assault (襲擊) P and/or (ii) D1 (then director of D2) and/or Chiau (a director of D2) to threaten (恐嚇) and beat up (歐打) P on multiple occasions from sometime in 2010 to about February 2012, which led D1 to assault P in the Incident of 6 September 2012. Besides the above, there was no ground, basis or cause of action advanced by P against D2.

31. Mak claimed he had reviewed in detail the records of D2 from 2010 to September 2012, and there were no board minutes, board resolution or any other sort of document which suggested that D2 directed D1 and/or Chiau to commit any acts against P.

32. Mak further claimed that P’s claims against D2 were groundless and could not possibly succeed because:

(a) D1 resigned from his directorship on 2 February 2012 and was no longer a director/employee of D2 thereafter, so on the date of the Incident D1 was not a director or employee of D2.

(b) The proceedings in HCA650/2010 between P and D1 arose out of personal matters between them, and D2 was not a party to those proceedings.

(c) To the best of Mak’s knowledge, there was no relationship between D2 and P, whether at the time of the Mak 1^st Aff or at the time of the Incident.

(d) At the material times, D2’s executive directors were Chan, Peng Zhanrong, Chiau and Wu Jianwei. Upon enquiry, each of them confirmed they had never, whether in their own capacity or otherwise, instigated and/or instructed D1 to do the acts P alleged. Mak particularly made more detailed enquiries with Chiau, who confirmed to Mak he was not present at the time of the Incident. Chiau knew P (and vice versa) through his friendship with D1, but they were not acquainted with each other. Chiau confirmed to Mak he did not do the acts P alleged in his personal capacity nor had he instigated and instructed D1 to do such acts.

(e) P’s allegations against D2 were bare assertions of serious misconduct, but no details or particulars had been given by P as to how D2 instigated (慫恿) and instructed (教唆) D1. Mak denied P’s wild, baseless and unparticularised allegations that D2 had engaged in criminal conduct. Mak said these false and scandalous bare allegations illustrated the abusiveness and vexatiousness of P dragging D2 into the present action.

(f) D1 is a listed company, and there was no reason why D2 would commit the acts P alleged, particularly as P had no relationship whatsoever with D2 at the time of the Incident. Mak believed P had abusively exploited the fact that (a) D1 was a former director of D2 and (b) P knew Chiau was a friend of D1, and then went on to make serious and wild bare allegations in order to justify his abuse in making D2 a party to the present action. Such abusive involvement of D2 in the present action was damaging to its reputation, which in turn was detrimental to the interests of its shareholders, including members of the public.

(g) Notwithstanding the opportunity given to P to file evidence to oppose the Summons, P failed to present any evidence of D2 “directing” and “authorising” any acts by D1 and/or Chiau against P or any evidence which P could rely on to support his case against D2.

V. HCA650/2010

33. HCA650/2010 concerned a claim by P against D1 for outstanding wages in the sum of $616,129.02 and bonus of $10,480,000. D2 was not a party to HCA650/2010. HCA650/2010 was tried before LChan J, and the learned judge handed down the Judgment on 17August 2015.

34. By the Judgment, L Chan J dismissed P’s claim against D1 in HCA650/2010, and held inter alia that:

(a) D1 was the beneficial owner of Kenelly Group Ltd, and through Better Lion Holding Ltd (held via Kenelly Group Ltd) purchased 40% of the shares of Mudanjiang Gaoke Bio-Chem Co Ltd with finance provided by D2 (paragraph 98).

(b) P as nominee and trustee acted as director/shareholder of Kenelly Group Ltd and Better Lion Holding Ltd on behalf of D1 as beneficial owner (paragraph 98).

(c) P was not an employee of D1 during the period from January2007 to January 2008, and “[P]所指的口頭僱傭合約,是無中生有” (paragraphs 113 and 120).

(d) The accounts that P opened with 3 stockbrokers in June2007 were “[P]按[D1]指示而開的,以便以[P]名義,為[D1]炒賣股票 ……” (paragraph 115).

VI. LEGAL PRINCIPLES ON STRIKING OUT

35. The principles governing a striking out application are well established. Hong Kong Civil Procedure 2016 Vol 1 para 18/19/4 at pp448-450 provides inter alia as follows:

“…... It is only in plain and obvious cases that the court should exercise its summary powers to strike out …… any pleading under this rule. …… Disputed facts were to be taken in favour of the party sought to be struck out. Nor should the court decide difficult points of law in striking out proceedings. The claim must be obviously unsustainable, the pleadings unarguably bad and it must be impossible, not just improbable, for the claim to succeed before the court will strike it out. …… Plain is not the same as simple and obvious is not the same as short… if on a careful reading of the Statement of Claim however complicated, it can be seen that there is no cause of action, a court can, and probably will, order it to be struck out …… The mere fact that the case is weak and not likely to succeed is no ground for striking it out ……

It is for the party seeking to strike out …… pleading to demonstrate that the case is a plain and obvious one in which the other party’s claim is bound to fail. ……

…… This rule also empowers the court to amend …… any pleading. However, unless there is reason to believe that the case can be improved by amendment, leave will not be given. Or where the amendments would be far‑reaching and so radical as to amount to a totally new pleading which would probably provoke a fresh application to strike out, the correct course is to strike out. ……”

36. The fact that in a particular case the question of law appears difficult or obscure does not preclude the court from striking out pleadings if it is satisfied it has all the necessary information to decide the question, and has come to the conclusion after full argument in the face of all relevant information that the case is plainly and obviously one for striking out. In such circumstances, the court “should not decline to do so on the ground that the issues are difficult or complicated” (see Byjoy Ltd v Thorogood Estates Ltd [1985] 2 HKC 746, 758).

37. It must also be borne in mind that the object of the jurisdiction under Order 18 rule 19 of the RHC “is to ensure that defendants shall not be troubled by claims against them which are bound to fail, having regard to the contested facts. …… In those circumstances it is pointless for the case to go on so that the defendant can deliver a defence. The delivery of the defence occupies time and wastes money; and even more useless and time consuming from the point of view of the proper administration of justice is that there should then have to be a summons for directions, and an order for an issue to be tried, and for that issue to be tried before the inevitable result is attained …… the object is “to prevent parties being harassed and put to expense by frivolous, vexatious or hopeless litigation.” ……” (see Riches v Director of Public Prosecutions [1973] 1 WLR 1019, 1027).

38. In Sealegend Holdings Ltd v China Taiping Insurance (HK) Co Ltd HCAJ95/2012, Au-Yeung J (unreported, 24 October 2014), it was said that:

“25. A proceeding is frivolous when it is incapable of reasoned argument, without foundation or cannot possibly succeed. A proceeding is vexatious when it is oppressive or lacks bona fides. The expression “frivolous or vexatious” includes proceedings which are an abuse of the process: Hong Kong Civil Procedure 2014, §18/19/8.

26. An “abuse of the process of the court” connotes that the process of the court must be used bona fide and properly and must not be abused. The court will prevent the improper use of its machinery, and will, in a proper case (eg where an action is absolutely groundless or time-barred) summarily prevent its machinery from being used as a means of vexation and oppression in the process of litigation: Hong Kong Civil Procedure 2014, §18/19/10.

27. The court has inherent jurisdiction to stay all proceedings before it which are obviously frivolous or vexatious or “hopeless” in the sense of being bound to fail: Hong Kong Civil Procedure 2014, §18/19/12, 16 and 21.”

39. In Total Lubricants Hong Kong Limited & ors v Christophe de la Cropte de Chanterac & ors HCA1694/2008, Poon J (as he then was) (unreported, 15 December 2009), Poon J (as he then was) said as follows:

“14. First, if a pleading is capable of being cured by amendments, it should not be struck out. An opportunity to amend should be given instead. However, if the pleading is so defective that no amendment can cure it or if the proposed amendment is incapable of improving the defects, the pleading is liable to be struck out and the proposed amendment should be refused.

15. Second, when a party seeking to amend his pleadings in order to save it from being struck out, the proposed amendment should be properly and exactly formulated, includes all necessary averments or mandatory particulars and constitutes a full and complete plea of a reasonable cause of action.”

40. Mr Chain referred to Viva Steamship Co Ltd v ChowLimChoy & ors [2003] 1 HKLRD 663 and Kuok Luen (Macau) Agente de Programas Televisos Limitada & ors v Tidetime Sun (Group) Limited (formerly known as Sun Television Cybernetworks Holdings Ltd) & anor HCA1456/2006, DHCJ Burrell (unreported, 8April 2011) (upheld on appeal to the Court of Appeal in CACV77/2011 (unreported, 4October 2011)) as illustrations of the operation of the aforesaid legal principles. Although I have considered those cases, I find it unnecessary to deal with them at any length because (as Mr Chain accepted) whether a claim “cannot possibly succeed”, is “hopeless in the sense of being bound to fail” or is “wholly imaginary, a myth or not bone fide” must be a case‑specific assessment in the context of the particular circumstances of each case.

VII. DISCUSSION

41. Since it is trite that a defendant only need to meet the plaintiff’s case as pleaded, the starting point must be to ascertain the nature and/or basis of P’s claim or cause of action against D2.

(a) Nature of P’s claims against D2

42. I agree with Mr Chain that upon careful scrutiny of the SoC, P’s cause of action against D2 was not one of vicarious liability (轉承法律責任) (ie D2 being vicariously liable for the alleged wrongful acts committed against P by D1 and Chiau as employees/agents of D2) (see Ronia Limited v William Clarke (trading in the name of “Clark & Liu, Solicitors before 1 January 2000) HCA3972/2000, Chung J (unreported, 4March 2005) paras 34-44), but one of secondary liability by authorising the commission of tortious acts by primary tortfeasors (ie D2 directing or authorising D1 and Chiau to commit the alleged wrongful acts against P). This distinction is of significance because the elements that constitute liability are different.

43. On the face of the SoC, there were no words or characters pertaining to vicarious liability. But even as a matter of substance, Paragraph4 was not a plea of vicarious liability, ie a master or principal (including an innocent one) being made liable for the tortious acts of its employees/agents by operation of legal principles.

44. Rather, Paragraph 4 was a plea of secondary liability on the part of D2 (as master or principal) having directly authorised D1 and Chiau by instigation (慫恿) and instruction (教唆) to commit tortious or criminal acts against P, ie threats (恐嚇) and beating up (歐打). P did not plead any claim or any alternative claim of vicarious liability.

45. Atiyah, Vicarious Liability in the Law of Torts (1967) at p289 made clear the distinction between such secondary liability and vicarious liability as follows:

“The liability of a person who makes himself a party to a tortious act committed by another is not strictly speaking, a vicarious, but a personal liability. He is liable not so much because the law imposes liability on him for the acts of the other, but because the law imposes liability on him for his own acts.”

Thus, the concepts of the earlier Salmond test (ie employers are liable for the torts committed by their employees in the course of their employment) and the later close connection test (ie whether the employee’s tort was so closely connected with his employment that it would be fair and just to hold his employer vicariously liable) which are pertinent to the consideration of vicarious liability (see Ming An Insurance Co (HK) Ltd v Ritz-Carlton Ltd (2002) 5 HKCFAR 569) have no application in relation to secondary liability of authorising the commission of a tort.

(b) Applicable test for secondary liability of authorising the commission of a tort

46. Despite Mr Chain’s diligence, there appeared to be little modern authority on this kind of liability. As explained in Atiyah at p289, “[this] is no doubt due largely to the fact that the liability of secondary parties in the field of torts is of little importance when set against the great width of the doctrine of vicarious liability ……” (see also Jalnarne Ltd & anor v Ridewood (1989) 61 P&CR 143, 161 per DJ Moseley QC).

47. Jalnarne Ltd & anor confirmed that Atiyah remained the authoritative text, and I agree with Mr Chain that the discussion in pages291-294 therein, which referred to a number of English authorities from the 1800s and early 1900s, demonstrated that the test for secondary liability of authorising the commission of a tort is as follows:

(a) whether the defendant (ie secondary tortfeasor) directed an act to be done by the primary tortfeasor(s);

(b) whether the tort committed by the primary tortfeasor(s) was the inevitable or necessary consequence of the act the defendant (ie secondary tortfeasor) directed to be done.

Under this test, it is unnecessary to carry out the broad factual enquiry required under the close connection test for the purpose of establishing vicarious liability.

48. As explained above, Paragraph 4 averred that (a) from sometime in 2010 to sometime in 2012 D2 directed D1 and Chiau to threaten (恐嚇) and beat up (歐打) P (“Alleged Directions”), and (b) the Incident whereby D1 committed assault or battery against P and which caused P to suffer personal injuries was an inevitable or necessary consequence of the Alleged Directions.

49. For the purpose of the Appeal, Mr Chain conceded the (b) limb above was arguable, so the core question was whether there was sufficient basis under the (a) limb above such that it was not so plain and obvious that P’s claims against D2 ought to be struck out.

(c) Alleged Directions

50. Mr Chain submitted there were no material facts or particulars to support the bare assertion of the Alleged Directions in the SoC, and the affirmation evidence filed by P to oppose the Summons and/or to support the Appeal also did not raise any evidential basis for the Alleged Directions. In the circumstances, it was argued there was no scintilla of evidence that D2 authorised D1’s acts in the Incident by giving the earlier Alleged Directions, so P’s pleaded claim against D2 could not possibly succeed.

51. First, Paragraph 4 being the relevant part of P’s pleadings that dealt with P’s claims against D2 averred that from 2010 to 2012 D2 instigated (慫恿) or instructed (教唆) the then chairman (ie D1) and executive director (ie Chiau) of D2 to threaten (恐嚇) and beat up (歐打) P, to warn P not to disclose to others D2 “收購國內企業的內幕”, and to require P to dismiss his own claim against D1 in HCA650/2010, which eventually led to the battery against P at the Incident on 6September 2012 that caused P to suffer personal injuries.

52. But the SoC did not plead any material facts or particulars as to the occasions when/how, the persons by whom and the manner by which D2 instigated (慫恿) or instructed (教唆) D1 and/or Chiau to commit the alleged wrongs against P, hence P’s allegation of D’s instigation and/or instruction was nothing more than a bare assertion.

53. Secondly, D2 by the Mak 1^st Aff effectively challenged P to spell out what evidence he could put forward to support his bare assertion in the SoC that D2 was liable to him (in the sense that P had authorised D1 and/or Chiau to commit the alleged wrongs against D2). But all P was able to come up with was the assertion in the P 2^nd Aff that on many occasions during 2010-2012 (including attendances at the Labour Tribunal, District Court and D2’s office), D1 (D2’s then director and chairman) and Chiau (D2’s then executive director) “威脅和恐嚇” P’s physical safety, and in doing so they claimed they were acting on behalf of D2 or D2 required them to do so.

54. Although P claimed such assertions by D1 and Chiau demonstrated instigation (慫恿) and instruction (教唆) on the part of D2, which meant D1’s and/or Chiau’s acts of “威脅和恐嚇” against P were done on behalf of D2, Iam not persuaded by such argument.

55. D2 was/is a listed company, and at the material time had a functioning board of directors comprising Chan, Peng Zhanrong, WuJianwei, Chiau, D1 (prior to his resignation on 2 February 2012) and other non-executive directors. It is trite that a company normally acts through its board of directors, which makes decisions by majority vote, so 1-2 directors or former directors (eg Chiau and/or D1) in contra‑distinction to the board of directors (or at least the majority of the board of directors) acting in a certain way (a) would not necessarily mean their acts were done upon D2’s express direction, and (b) could not have caused D2 to give the Alleged Directions to themselves. Further, in the absence of a plea of vicarious liability, the fact D1 and/or Chiau were directors and/or former directors of D2 were neither here nor there in the context of authorisation of commission of a tort.

56. Moreover, P’s allegation that D1 and Chiau claimed they were acting on behalf of D2 of itself was not sufficient proof that D2 authorised the commission of the alleged wrongful acts against P. MrChain suggested (and I agree) that some indicia of authorisation must emanate from D2, and it would not be sufficient just to see how D1 and/or Chiau were clothed. Mr Chain illustrated this point by suggesting that “if a random person committed assault and battery, and whilst doing so claimed to have been authorised by Cheung Kong Holdings or HSBC to do so on their behalf, that bare assertion would not prove that he had indeed been authorized by those companies. If it is alleged that Cheung Kong Holdings or HSBC authorized such an act, some evidence must be adduced to show authorization by the board of directors or a representative delegate empowered to give such authorization”.[1]

57. Despite the P 1^st and 2^nd Affs and paragraphs 1-4 of the P 3^rdAff that P filed to resist the Summons and to support the Appeal, and as P acknowledged in his oral submissions at the Appeal Hearing, there were no board resolution/minutes or other documentary record/evidence to show that the board of directors of D2 had made any decision to give the Alleged Directions to D1 and/or Chiau.

58. Secondly, P alleged D1 was a director/chairman of D2 during 2010-2012 (ie before 2 February 2012) and was/is the majority shareholder of D2. Mr Chain submitted (and I agree) that such fact of itself would not aid P because D2 being a listed company was a separate legal personality distinct from P as a director, former director and/or shareholder. There was no plea by P and no affirmation evidence forthcoming from him that he was able to dictate or control the functioning board of directors of D2 at the material time. Mr Chain drew my attention to paragraph 2 of the P 3^rd Aff where P himself recognised and acknowledged the separation of legal personality between D1 and D2 such that D2 had to give directions to D1, ie P said D1 in filing his Defence just before the Master Hearing, “正正顯示[D1]是根據[D2]的指示而配合”. But there was clear paucity of particulars and/or evidence beyond bare assertions that D2 by its board authorised or directed D1 and/or Chiau to threaten and/or beat up P.

59. Thirdly, P in the P 2^nd Aff alleged that Chan (then a director of D2) was aware that D1 as then chairman of D2 instigated (慫恿) another director Chiau to “威脅和恐嚇” P, but P’s affirmation evidence fell far short of saying that Chan (as part of the directing mind of D2) was party to and/or endorsed the Alleged Directions.

60. Fourthly, P suggested there were some sort of tenuous connection between him and D2 as evident in paragraphs 85-88, 98 and 115 of the Judgment. In fact, HCA650/2010 dealt with a personal dispute between P and D1, and the findings therein were not binding on D2 who was not a party to those proceedings. Apart from referring to paragraphs 85-88, 98 and 115 of the Judgment, P did not give further evidence or particulars as to his alleged connection with D2.

61. But even on the face of paragraphs 85-88 and 98 of the Judgment (Mr Chain was at pains to make clear that D2 did not accept the contents therein), L Chan J merely explained P held Kenelly Group Ltd and Better Lion Holding Ltd as nominee and trustee for D1 by acting as their director/shareholder, and D1 purchased 40% of the shares of Mudanjiang Goake Bio-Chem Co Ltd through Kenelly Group Ltd and Better Lion Holding Ltd (of which he was the beneficial owner) with finance provided by D2. In the circumstances, the Judgment only referred to some connection between P (nominee/trustee) and D1(beneficial owner) in respect of ownership, shareholding and directorship of Kenelly Group Ltd and Better Lion Holding Ltd, and between D1 (purchaser) and D2 (financier) in respect of the purchase of 40% of the shares of Mudanjiang Goake Bio-Chem Co Ltd. There did not appear to be any significant finding of connection and relationship between P and D2.

62. Further, it was incorrect for P to say that L Chan J in paragraph 115 of the Judgment held that D1 instructed him to open accounts with 3stockbrokers to buy and sell shares of D2 on behalf of D1, “也可證明[D2]是和[P]有關聯的”. In fact, paragraph 115 of the Judgment only found P opened the 3 accounts with the stockbrokers in P’s name, “為[D1]炒賣股票”. There was no finding that the purpose of the 3 accounts was specifically for buying and selling the shares of D2. I am not persuaded the Judgment confirmed any significant relationship between P and D2. But even if it did, such matters would only be relevant to the wider factual enquiry if there were a plea of vicarious liability, but not when the considerations were more limited under the present plea in the SoC of authorising the commission of torts.

63. Fifthly, Mr Chain complained that P made scandalous allegations of money laundering and stock market manipulation against D2. But none of these serious but vague allegations were particularised in the SoC, the P 1^st and 2^nd Affs, and paragraphs 1-4 of the P 3^rd Aff. More importantly and in any event, these allegations did not in any way affect the aforesaid analysis.

64. Further, it must be remembered that P’s allegations against D2 amounted to accusations of serious misconduct or even criminal acts. MrChain reminded it is well established that “[the] more serious the act or omission alleged, the more inherently improbable must it be regarded. And the more inherently improbable it is regarded, the more compelling will be the evidence needed to prove it on a preponderance of probability” (see Solicitor (24/07) v Law Society of Hong Kong (2008) HKCFAR117, 167). Bearing in the mind the lack of proper plea of material facts and/or particulars to sustain P’s case against D2, the presently available evidence that P put forward would not be sufficient to support any finding that D2 had given the Alleged Directions to D1 and Chiau.

(d) Miscellaneous considerations

65. P claimed he did not receive some of the hearing documents served by D2 before the Master Hearing. He agreed Master Leong offered him the choice of adjourning the hearing of the Summons, but he eventually chose to have the matter stood down until the afternoon. Hence, time was indeed given to P for additional preparations. However, P’s complaint had little significance by the time of the Appeal Hearing because P had more than sufficient time after the Master Hearing to consider the relevant documents and Mr Chain’s then written submissions.

66. P also alleged D1 filed his Defence on 11 September 2015 shortly before the Master Hearing, which demonstrated “[D1]是根據[D2]的指示而配合,地表明[D1]是為了[D2]的利益出發”. I am unable to reach such sinister reading of D1’s conduct in filing his Defence. On 13March 2015, D1 filed a summons to seek extension of time to file and serve his Defence. On 24 March 2015, Master Leong granted an order that D1 and D2 were not required to file and serve a Defence pending the substantive hearing of the Summons. Whilst this was a permissive order, it did not debar D1 from filing and serving his Defence as and when it was ready. It must also be remembered that D1 did not apply to strike out P’s claim against him, so he would have to file his Defence in any event. More importantly, D2 did not rely on D1’s Defence at all for the purpose of the Summons/Appeal.

67. At the Appeal Hearing, after having heard Mr Chain’s oral submissions, P in his reply submissions suggested he should be allowed to supplement his affirmation evidence with evidence from Chan and Chiau to be introduced by subpoena to them to give oral evidence, to provide witness statements and/or to “同[P]去對質” for the purpose of the Appeal. Iam unimpressed by such proposal. No special grounds were given as to why the court should allow further evidence to be adduced for the purpose of the Appeal, especially when the nature of the evidence to be adduced was unclear or even unknown. In any event, it was P who resisted D2’s application for adjournment, and who insisted on proceeding with the Appeal at the Appeal Hearing. In all the circumstances, P’s request was nothing more than a desperate but hopeless attempt to salvage his claims against D2, and I decline to entertain it.

68. I also note that although Master Leong struck out Paragraph4 and P’s claims against D2 in the present action, he gave liberty to P to apply to amend the SoC and to re-add D2 as needed within 63days from the date of the Order, ie on or before 16 November 2015. Such order was a fair one, especially when P had not put forward his formulation of any proposed amendment. Bearing in mind the guidance in Total Lubricants Hong Kong Limited & ors discussed in paragraph39 above, it was plainly incumbent upon P to properly formulate the necessary amendments, and not for the court to speculate how the SoC should be revised (particulars of which were as yet unknown), especially in face of the problems highlighted by Mr Chain.

VIII. CONCLUSION

69. For all the above reasons, there is no merit in the Appeal, and I dismiss it. There is no reason why costs should not follow event. I therefore grant a costs order nisi that P do pay to D2 costs of and occasioned by the Appeal (with all costs reserved, if any) to be summarily assessed and paid forthwith.

70. For the purpose of the summary assessment of costs, I grant the following directions:

(a) if no application is made to vary the costs order nisi within 14days from the date hereof, (i) D2 do within 21 days from the date hereof lodge and serve statement of costs not exceeding one page pursuant to Practice Direction 14.3, and (ii) P do within 7 days thereafter lodge and serve succinct summary of objections of not more than one page in respect of D2’s statement of costs (“Objection Summary”), and (iii) unless otherwise directed the summary assessment of costs will be by paper disposal;

(b) if application is made to vary the costs order nisi within 14days from the date hereof, (i) the directions in (a)(i) and (ii) above shall stand and apply, and (ii) the application for variation of the costs order nisi and (where appropriate) summary assessment of costs shall be heard before me in chambers (open to the public) on a date not before 42days from the date hereof with half hour reserved.

71. Should P require translation of this Decision into punti language, he can contact my clerk to arrange an appointment for a court translator to verbally translate this Decision to him at the High Court Building at a mutually convenient time.