UBIQUITI NETWORKS INTERNATIONAL LTD v. CHAN KIM CHUEN formerly t/a SAN CHUN TECHNOLOGY CO AND ANOTHER

HCA 1606/2016

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

ACTION NO 1606 OF 2016

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REASONS FOR DECISION

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Introduction

1.  On 26 May 2017, this court handed down a decision dismissing the defendants’ applications to strike out the plaintiff’s claim and to expunge alleged without prejudice materials produced by the plaintiff (“Decision”).

2.  Unless otherwise indicated, I shall continue to use herein the abbreviations in the Decision.

3.  Ds sought leave to appeal against the Decision. At the hearing of the leave application, I declined to grant leave and granted Ds an extension of time of 7 days to file their defence.  Here are my reasons.

4.  There are 6 main grounds of the intended appeal, the first 4 in relation to the abuse of process issue, the 5^th ground in relation to P’s claim disclosing no reasonable cause of action, and the last ground in relation to the WP Materials. 

Abuse of process

5.  Under the 1^st Ground, Ds complained that this court erred in holding that “there was no sufficient evidence that D1 was otherwise vexed or oppressed or unjustly harassed”.

6.  Under the 2^nd Ground, the complaint was that this court (i) narrowly construed and held that “there was no settlement in the 1^st Action” and (ii) not finding that the D1’s payment of the sum pursuant to the Default Judgment to P in the 1^st Action and D2’s refund of the relevant sum to P were in effect a settlement of the 1^st Action between P and D1 and a settlement of the relevant dispute between P ad D2.

7.  Under the 3^rd Ground, the complaint was that this court erred in holding “There was no evidence that the present action involved unjust harassment of oppression of D2” and “There was no evidence for D2 to believe that there would not be any proceedings against him by him being left out of the 1^st Action”, and that this court should have found that there was an abuse of process simply by reason of the fact that D2 was deliberately not joined in the 1^st Action by P.

8.  The 4^th Ground is a wrapping up ground.

9.  Mr Chen had argued at the leave hearing that the court ought to have considered that by proceeding the way that P did, D1 was led into a false sense of security, and that if the “wider conspiracy” had been pleaded in the 1^st Action, D1 might consider not to allow the 1^st Action to go by default.  Mr Chen further pointed out that Mr Maurellet had accepted that there might have been a valid basis to plead the wider conspiracy against D1 in the 1^st Action but P had wanted to see whether further evidence could be gathered, and thus Mr Chen submitted that although P is a victim, it was P’s own decision to adopt a wait and see attitude and that if there is any prejudice to P, then P has itself to blame.

10.  There were 8 claims in the endorsement of claim in the 1^st Action against D1 and another at the time.  D1 was legally represented throughout, and he had allowed the matter to go by default some 3 weeks after various open correspondence between the parties.  By then, there was clearly no settlement, in that there was no agreement on P’s part that, upon receipt of the full payment from D1, P would have its claims dismissed and to confirm that no other outstanding obligations or indebtedness were due from D1, as requested by D1’s then solicitors in their open letter of 3 July 2015.

11.  So far as D2 is concerned, Mr Chen accepted that D2’s case is a bit weaker, but argued that if P had brought all the claims including the wider conspiracy in the 1^st Action, D2 would have been dragged in or joined at that time.  I can only repeat what was said by Lord Justice Clarke in Dexter Limited, quoted by this court in paragraph 58 of the Decision.  I see no sufficient evidence of unjust harassment or oppression of D2.

12.  As stated in the Decision, the application of the Henderson principles is a “broad merits-based assessment”, and this is a holistic exercise and the court is to weigh up all the factors in the assessment.

13.  The burden of establishing abuse is on both Ds and this court came to the view that there was no abuse in P bringing the present action after taking into account all the circumstances in the assessment. 

14.  I am not satisfied that the grounds under the “Abuse of Process” have a reasonable prospects of success.

No reasonable cause of action

15.  Under the 5^th Ground, the complaint is that this court took into consideration unpleaded matters in rejecting Ds’ submissions that P’s claim discloses no reasonable cause of action.  The unpleaded matters were what were stated in paragraphs 84-85 of the Decision.

16.  Mr Chen also repeated at the leave hearing Ds’ complaint that P’s conspiracy claim lacks the particulars required and hence discloses no reasonable cause of action.

17.  I have said in paragraphs 82 and 83 of the Decision that paragraph 16 of the statement of claim has particularized the unlawful Fraudulent Scheme including the acts carried out by the fraudsters and the various different recipients in various jurisdictions and Ds were the direct recipients of the 5 and the 6^th Transfers.  I have already come to the view in paragraph 83 that from the facts pleaded Ds would sufficiently know P’s case on the conspirational combinations(s) or agreement(s) that they have to meet.

18.  As pointed out by Mr Maurellet, what I said thereafter in paragraphs 84-85 are an “in any event” holding or aimed at the “frivolous or vexatious” contention.

WP Materials

19.  Mr Chen had argued that the intention of D1 in sending out those WP letters was for negotiation, and that P by sending the WP 07.07.15 Letter was acknowledging or there was an implied agreement that was the intention of the parties, and that this was not taken into account by this court. 

20.  However, this court did not accept that argument as it was this court’s finding in paragraph 102 of the Decision that there were no settlement proposals made in D1’s WP 29.06.15 Letter and WP 03.07.15 Letter, and that any settlement discussions only commenced with D1’s open 03.07.15 Letter, to which P responded by their WP 07.07.15 Letter. 

Conclusion

21.  In light of the above, I have declined to grant leave.  I am of the view that Ds have not been able to demonstrate to this court that the proposed appeal has reasonable prospect of success.  Paragraph 1 of Ds’ summons of 8 June 2017 was dismissed.

22.  In paragraph 2 of Ds’ summons, Ds sought an extension of time to file and serve their defence.  I have allowed 7 days.

23.  I have also ordered costs of the summons be to P in any event.  Mr Chen had argued against certificate for two Counsel, and submitted that P had an easier task in the leave application, and it was made clear to P that he would be appearing without any Senior Counsel.  In the end, I allowed P certificate for one Counsel.