PULSE MEDIATECH LTD v. UCAN TECHNOLOGY HOLDINGS LTD FORMERLY KNOWN AS UCAN TECHNOLOGY (MACAU) CO LTD AND OTHERS

HCA 1157/2014
HCA 1158/2014

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

ACTION NO 1157 OF 2014

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IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

ACTION NO 1158 OF 2014

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DECISION
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1.  This is an appeal against the decision of Master R Lai given on 21 January 2015, dismissing the 2nd and 3rd plaintiffs’ summonses to strike out the defendants’ claim against them in both actions.

2.  The master made no order under the summonses upon undertaking of the plaintiffs’ solicitors to amend the statement of claim in each of the two actions along the lines they had indicated they would agree to at the hearing below.  The amendments that were subsequently made confined the causes of action in breach of agreement and misrepresentation under section 3 of the Misrepresentations Ordinance to the 1st defendant only.  The cause of action in fraudulent misrepresentation against both the 2nd and the 3rd defendants was allowed to stand without any substantive amendment.

3.  After hearing submissions, the master also ordered the 2nd and 3rd defendants to pay the plaintiff half of the costs of the application with certificate for counsel, the costs incurred by the plaintiff in relation to the two summonses to be apportioned equally between the two actions. 

4.  The 2nd and 3rd defendants now appeal against the orders of Master Lai. 

5.  The 2nd defendant argues that the claim of fraudulent misrepresentation against it in both actions should have been struck out except insofar as it relates to the first misrepresentation pleaded in both actions, an aspect of the appeal that was abandoned in respect of both actions as indicated in their counsel’s second supplemental skeleton argument. The 3rd defendant argues that the claim of fraudulent misrepresentation against it in both actions should have been struck out in entirety.  On behalf of both the 2nd and 3rd defendants, it was argued that the costs order ought to have been more favourable to them.  

6.  The thrust of the defendants’ argument on striking-out is founded on the view taken by counsel for the 2nd and 3rd defendants on what were required to be pleaded for the purpose of sustaining the claim in fraudulent misrepresentation.

7.  Having read the written submissions of both parties and heard counsel’s oral arguments, and in considering the matter afresh as if it were a rehearing of the summonses, I find myself in substantial agreement with the reasoning of Master Lai who gave an extempore decision following the hearing, a transcript of which was included in the hearing bundle between pages 87 to 90.  In particular, I agree with Master Lai that while better particulars could have been given of the issue of knowledge of the falsehood of the misrepresentation, the absence of clearer particulars on which facts are relied on for inferences to be drawn is not such as to fall short of the established requirements on pleading of this cause of action. 

8.  The pleading of knowledge in the respective actions, that is paragraph 12 in Action 1157 and paragraph 10(c) in Action 1158, relied on actual knowledge.  The plaintiffs’ case is that all the primary facts relied on for inference to be drawn pointing to knowledge have already been pleaded.  Indeed, if the plaintiffs should choose to rely on unpleaded facts to infer knowledge, they will face considerable difficulty at trial unless they amend to include pleading of such facts. 

9.  My attention was drawn to an extract of Bullen & Leake & Jacob’s Precedents of Pleadings, 13th edition, page 430, cited and relied on in the judgment of the Court of Appeal in Rigby v Decorating Den Systems Ltd [1999] EWCA Civ 986 which supports the contention of Mr Chung.  Neither do I find the dicta in Three Rivers DC & Others v Governor & Company of the Bank of England (No 3) [2003] 2 AC 1 contradictory to that position.

10.  While the pleading is not perfect, the question is whether it is a suitable case for an application to strike out, or if the matter can be more suitably dealt with by a request for further and better particulars.  Litigants must not be encouraged to seize upon imperfections in pleadings, either by way of obvious mistakes, such as those that the plaintiffs’ counsel agreed to clear up by amendment once the nature of the objection was brought to his notice, or for the form or insufficiency of the pleading of the particulars that do not go to the core of the pleading of the cause of action as necessary justifying a striking out application.  Nothing prevents the defendants from serving an appropriate request for further and better particulars upon the plaintiffs to clear up any ambiguities or probe for further particulars or material averments.  Striking out applications should be reserved for plain and obvious cases where the pleadings are not just imperfect, but unsustainable.

11.  As for the order on costs made by the master, I do find that the combined effect of the emptiness of the letters served purportedly pursuant to Practice Direction 19.1 and the lateness of the skeleton argument justified an order making the 2nd and 3rd defendants pay half the costs of the plaintiff. 

12.  For the purpose of apportionment of costs, I do not find it reasonable to count the causes of action removed from the list of claims against the 2nd and 3rd defendants and arithmetically apportion the costs accordingly.  This is because it would have been apparent to any reasonable counsel that those were obvious mistakes that required rectification upon the objection being clearly stated and the need for amendment would likely be agreed without substantive arguments.  Instead, most of the time of the hearing below was expended on whether the fraudulent misrepresentation cause of action was so badly pleaded as to have warranted the claim being struck out, on which the 2nd and 3rd defendants did not succeed.

13.  I do not find there to be good reasons to come to a different conclusion on the apportionment of costs than what the Master has decided.  I would dismiss both appeals, with costs of the appeals to be paid by the 2nd and 3rd defendants to the plaintiff, to be taxed if not agreed.