CHING KA CHUN v. Y STATION CO LTD

DCCJ 5699/2021

[2022] HKDC 679

IN THE DISTRICT COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

CIVIL ACTION NO 5699 OF 2021

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DECISION

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1.  This is an application by the plaintiff for default judgment against the defendant for declarations and damages under O 13, r 6 and O 19, r 7 of the Rules of the District Court (“RDC”).

2.  These proceedings were issued on 15 December 2021. According to the 1^st and 2^nd Affirmations filed respectively on 29 December 2021 and 24 May 2022 by Mr Kwok Ka Kin, a clerk of the solicitors for the plaintiff, the writ of summons indorsed with the statement of claim was served by leaving the same at the registered office of the defendant on the same day as the writ, ie 15 December 2021. The defendant failed to give notice of intention to defend within the prescribed time under O 12, r 5 and also failed to serve a defence within the time limit under O 18, r 2(1) of the RDC. After the present summons had been taken out, service of the same was immediately effected on the same day also by leaving a copy at the registered office of the defendant on 14 April 2022.

3.  As shown by the company searches conducted on 17 December 2021 and then on 19 May 2022, the defendant filed an Annual return on 1 March 2021. Its registered office remained at Workshop No 1 & 24, 5^th Floor, International Plaza, No 20 Sheung Yuen Road, Kowloon, Hong Kong. No notice of change of address of registered office appears to be filed with the Companies Registry since then.

4.  The defendant is absent from today’s hearing.

5.  For the purpose of this application, it is unnecessary to reproduce the entire Statement of Claim but to highlight the following pleaded facts:-

(a)  at the material time, the plaintiff was 28 years old and was a part-time waiter having received education up to Form 5 level. He was an ex-mentally ill patient with lower than average intelligence;

(b)  on 3 August 2019, a sales representative of the defendant stopped and told the plaintiff to join a membership for the use of gym facilities at its fitness centre free of charge. The sales representative further said that he would have no money for meals if he could not successfully bring a customer to the defendant’s fitness centre nearby. Feeling sorry, the plaintiff was partly led and partly dragged to the fitness centre;

(c)  upon arrival at the fitness centre, the plaintiff was brought into a room where a Mr Wong produced a customer agreement. After Mr Wong had filled in the personal information, the plaintiff was asked to sign on the agreement. The plaintiff refused because he noticed a membership fee of $50,000. Mr Wong did not allow the plaintiff to refuse by reason that the plaintiff’s personal information had already been filled in the agreement, but offered the plaintiff a discounted membership fee of $49,888 and requested for immediate payment;

(d)  in reliance on the representations of Mr Wong and feeling there was no alternative but to do as instructed, the plaintiff signed the agreement. A staff of the defendant then escorted the plaintiff to a nearby ATM machine to withdraw cash of $49,888 that was paid as membership fee;

(e)  before the plaintiff left the defendant’s fitness centre, he was asked by a staff to return on 5 August 2019 so that a personal trainer could teach the plaintiff how to use the fitness equipment;

(f)  feeling compelled, the plaintiff returned to the fitness centre on 5 August 2019 as directed when he was brought one more time into a room by Mr Wong. There Mr Wong presented two personal training agreements for the plaintiff to sign for a total of 91 training sessions. The plaintiff was told that if full payment was made at once, 7 out of 91 sessions would be free of charge;

(g)  the plaintiff felt he had no alternative but did as instructed. A staff of the defendant then escorted the plaintiff to a nearby ATM machine to withdraw cash in the total amount of $100,800 representing the total costs for 84 personal training sessions at $1,200 per session plus 7 sessions that were free;

(h)  the amount of $100,800 was paid to the defendant accordingly. At the request of a staff, the plaintiff further made an audio recording with a script preset by the defendant to say that the plaintiff made the payment voluntarily. The plaintiff was not provided with a copy of the recording;

(i)  after signing the personal training agreements, the staff of the defendant asked the plaintiff to try the fitness equipment. The plaintiff said that he wanted try on another day, but the staff insisted the plaintiff use the equipment before leaving. Feeling under pressure and helpless, the plaintiff used the equipment in the presence of a male trainer for about 10 minutes;

(j)  for the membership agreement, the plaintiff was not given sufficient time to read or understand the document before signing it and make payment. He was not aware of the existence of a 7-day cool-off provision in the agreement which would be invalidated when the facilities at the gym were used. The cool-off provision was in small prints, ambiguous and unclear. The membership agreement also recorded the redemption of a one-day trial pass which the plaintiff did not intend to and did not redeem on the day of the agreement;

(k)  the staff of the defendant knew or ought to have known the mental state of the plaintiff. They took advantage of and exploited his condition in order to impair his judgment resulting in the signing up of 91 sessions of personal training at the cost of $100,800 which were to be used within about 20 months between 3 August 2019 and 5 April 2021. On both days of 3 and 5 August 2019, the staff of the defendant were pushy and forceful towards the plaintiff;

(l)  none of the staff explained the terms or conditions of the personal training agreements and the plaintiff was not given sufficient time to understand the agreements before they were signed by him;

(m)  the plaintiff had no intention to use the gym facilities or the equipments on the day he signed the personal training agreements. The plaintiff did not know that he had invalidated the cool-off period provided under the membership agreement by using the equipments for 10 minutes;

(n)  the membership and personal training agreements were prepared by the defendant who was in a stronger bargaining power. The agreements contained terms that the plaintiff was not able to amend or challenge;

(o)  prior to this incident, the plaintiff had no experience in joining a membership with gyms. He did not have the opportunity to seek independent legal advice or opinion from other people;

(p)  on 6 August 2019, the plaintiff returned to the fitness centre to request for a cancellation of the agreements and a refund of payments made. The requests were refused by reason that the cooling-off provision had been voided.

6.  On the face of the pleaded case, which is not defended upon, I accept the submissions of Ms Fontanne Chu, counsel for the plaintiff, and have no hesitation to find that the various agreements entered by him were unconscionable or resulted from an aggressive commercial practice of the defendant. This is a classic case by which the plaintiff had been coerced into committing himself to a transaction that was unwanted and at a price entirely disproportionate to his financial abilities. The defendant clearly employed dishonest tactics to deflect the plaintiff’s will and to prevent his freedom to avoid or a right to back out from an obscure deal. This is let alone the fact that the plaintiff is mentally challenged who has received relatively basic education.

7.  I am satisfied that there is regular service of the writ and statement of claim and that on default of an intention to defend and service of a defence, it is appropriate to grant judgment and the reliefs sought under s 5 of the Unconscionable Contract Ordinance, Cap 458 and s 36 of the Trade Descriptions Ordinance, Cap 362.

8.  Ms Chu has indicated that the declarative relief under the Trades Description Ordinance and the relief for damages to be assessed will not be pursued. Accordingly, I enter judgment in favour of the plaintiff and make the following orders:-

(a)  there be a declaration that the customer agreement no Y000093, the personal training agreement no PTY000085 and personal training agreement no PTY00086 entered between the plaintiff and the defendant respectively on 3 and 5 August 2019 be set aside and rescinded;

(b)  the defendant do forthwith refund to the plaintiff a sum of $150,688.00 together with interest at judgement rate from the date of this order until payment;

(c)  costs be paid by the defendant summarily assessed at $55,755.30.