CHAN SAU YEE v. NG MING FAI AND OTHERS

HCA 996 / 2018

[2018] HKCFI 2843

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

ACTION NO 996 OF 2018

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REASONS FOR DECISION

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Introduction

1.  By a summons filed on 19^th June 2018 (“the Summons”), the 3^rd Defendant (“D3”) made an application under Order 18 rule 19 of the Rules of the High Court (“RHC”) for an order striking out the Amended Statement of Claim (“the ASoC”) on the purported ground that it allegedly disclosed no reasonable cause of action.

2.  I heard full arguments on the Summons on 21 December 2018, after which I (1) dismissed the Summons; and (2) ordered D3 to pay the costs of the Summons, summarily assessed with Certificate for Counsel at HKD 115,000, to the Plaintiff (“P”), forthwith (“the Decision”).

3.  My reasons for the Decision are as set out below.

Background

4.  The 2^nd Defendant (“D2”) was a local company which entered into a written loan agreement with P on 4 October 2016 and borrowed HKD 1,500,000 (“the Principal Sum”) from P for a full year, at the interest rate of 20% per annum, making the interest payable HKD 300,000 in total (“the Interest”).  D2 was to repay HKD 1,800,000 (the Principal Sum plus the Interest)to P within one month of 3 October 2017.

5.  The 1^st Defendant (“D1”), D3 and the 4^th Defendant (“D4”) were the relevant personal guarantors and their personal liabilities towards P were limited to HKD 600,000 (for D1), HKD 450,000 (for D3) and HKD 750,000 (for D4) respectively.

6.  D2 did not repay HKD 1,800,000 to P in full, whether within one month of 3 October 2017 or at all, and P commenced this action.

Submissions of D3

7.  In support of the Summons, Mr Devin CI Sio, Counsel for D3, submitted that P was only suing D3 for HKD 450,000 and it was an agreed fact between P and D3 that on 9 November 2017 P received a cashier order for HKD 450,000 from D3 so P could not possibly succeed in this action.

Submissions of P

8.  In opposition of the Summons, Mr Eddie HF Ng, Counsel for P, submitted, inter alia, that Counsel for D3 misunderstood P’s case.  P’s case, as had been set out in the ASoC, was that D2 owed P HKD 1,800,000 in total (the Principal Sum plus the Interest) and the cashier order from D3 was submitted by D3 in his capacity as a director and therefore an agent of D2, on behalf of D2.  P had already subtracted the sum of HKD 450,000 (being the value of the cashier order in question) from D2’s indebtedness which was why P only sued D2 for HKD 1,350,000.  It was for this reason P disagreed D3’s indebtedness had been extinguished.  Plainly, according to P, whether D3 was tendering the cashier order in question on behalf of himself (i.e. as D3) or on behalf of D2 would be an evidence-sensitive issue which could only be determined after trial. The Summons was, according to P, wholly misconceived.

My View

9.  In gist, I agreed with the submissions of P and disagreed with the submissions of D3.

10.  As the learned editors of HKCP 2019 had correctly observed in paragraph 18/19/4 of their work, in hearing a striking out application this Court must take all disputed facts in favour of the party sought to be struck out and rule on that basis.  A pleading should only be struck out if it would be literally impossible, not just improbable, for the pleaded case to succeed.  One must be careful not to drive any plaintiff from the judgment seat unless the matter was beyond doubt.

11.  Applying the principles set out above and assuming, as I must in hearing the Summons, that D3 was in fact acting as an agent of D2 when he submitted the cashier order in question to P, and that the payment was a payment from D2 instead of a payment from D3, the argument of D3 would be wrong, the legal liability of D3 as a guarantor would be subsisting, and P would have pleaded a good cause of action.  P’s pleaded case could have been justifiably or reasonably perceived by D3 as weak, but it was certainly not so bad as to enable me to strike it out completely.  That being the case, although I was sympathetic towards D3’s attempt to “nip P’s pleaded case in the bud”, I agreed entirely with P that the Summons was misconceived and should be dismissed.

Costs

12.  Costs should follow the event.

13.  On the question of Certificate for Counsel, in my judgment it was reasonable, necessary and proper for P to engage Counsel to argue the Summons substantively, given the potential consequence of an order being made in terms of the Summons, and the fact that D3 had himself engaged Counsel.  I granted Certificate for Counsel accordingly.

14.  On the quantum of costs, I examined P’s Statement of Costs and heard both parties’ full oral submissions on it.  In my view, P’s claim on quantum was only slightly excessive.  Making some slight deductions in relation to the time spent claimed by P’s solicitors, and allowing Counsel Fee in full, I assessed the quantum of costs payable by D3 for the Summons as HKD 115,000.

Final Remarks

15.  I thank both advocates for their able assistance.