FREITAS DE SOUZA, HELTON AND ANOTHER v. AEON CREDIT SERVICE (ASIA) CO., LTD

DCCJ 1963/2025

[2026] HKDC 1072

IN THE DISTRICT COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

CIVIL ACTION NO 1963 OF 2025

---------------------------------------

---------------------------------------

---------------------------------------

REASONS FOR DECISION

---------------------------------------

INTRODUCTION

1.  This is the appeal of the 1^st and 2^nd Plaintiffs (collectively “Plaintiffs”) against the order of Master Raymond Chu dated 21 October 2025 whereby the learned Master struck out the Plaintiffs’ Statement of Claim (“SOC”), dismissed the action, and ordered the Plaintiffs to pay the costs of the Strike Out Summons (defined in §12 below) summarily assessed at HK$65,000 (“Order”).

2.  The appeal was heard before me on 22 May 2026 (“the Hearing”). The 1^st Plaintiff appeared in person and the Defendant was represented by Counsel Mr Alex Fan. The 2^nd Plaintiff did not attend. The 1^st Plaintiff confirmed that he had authority to represent the 2^nd Plaintiff, and the Defendant raised no objection. In the circumstances, I considered it appropriate to proceed with the Hearing in the absence of the 2^nd Plaintiff pursuant to Order 32 rule 5 of the Rules of the District Court (Cap 336H) (“RDC”).

3.  The Plaintiffs in their skeleton arguments dated 19 May 2026 referred to, among others, some new evidence. Mr Fan agreed that I could, if necessary, consider the new evidence on the de bene esse basis.  

4.  At the end of the Hearing, I dismissed the Plaintiffs’ appeal against the Order. These are my reasons for so doing.

BACKGROUND

5.  The Plaintiffs are a married couple. On 23 February 2019, they each applied to the Defendant for the issue of a credit card.

6.  On or about 12 March 2024, the Plaintiffs defaulted on their respective credit card repayment obligations to the Defendant.

7.  On or about 15 March 2024, the Plaintiffs applied to have their outstanding credit card loans restructured.

8.  On 5 April 2024, the Plaintiffs each entered into a restructuring agreement with the Defendant in respect of their respective credit card loans (collectively “Restructured Loan Agreements”) on the following terms:

	1st Plaintiff	2nd Plaintiff
Aggregate outstanding indebtedness	HK$98,014	HK$119,590
No of installments	48	54
Monthly installment	HK$3,472	HK$3,960
Interest rate per annum	33.21%	32.68%

9.  The Plaintiffs defaulted in repayment under the Restructured Loan Agreements since October 2024 (for the 1^st Plaintiff) and November 2024 (for the 2^nd Plaintiff).

10.  As at 10 July 2025, the 1^st and 2^nd Plaintiffs remained indebted to the Defendant in the sum of HK$111,767 and HK$133,399 respectively (inclusive of unpaid principal interests but excluding the costs of external debt collection agency).[1]

11.  On 2 April 2025, the Plaintiffs issued the writ of summons indorsed with the SOC.

12.  On 20 May 2025, the Defendant took out a summons seeking to, inter alia, (1) strike out the SOC on the grounds that (a) it disclosed no reasonable cause of action, (b) it was scandalous, frivolous or vexatious, and/or (c) it was an abuse of process of the Court, and (2) dismiss the action (“Strike Out Summons”).

13.  On 21 October 2025, Master Raymond Chu struck out the SOC and dismissed the action.

14.  On 4 November 2025, the Plaintiffs filed a Notice of Appeal against the Order.

15.  The appeal was first scheduled to be heard before Deputy District Judge Gekko Lan on 3 February 2026. That hearing was adjourned (1) due to the critical medical condition of the Plaintiffs’ daughter and the medical condition of the 2^nd Plaintiff, and (2) to afford the Defendant time to address the relevance and legal effect of the CFA judgment in Sir Elly Kadoorie & Sons Limited v Samantha Jane Bradley [2026] HKCFA 2 which had then been recently handed down.

16.  The appeal was adjourned to 30 March 2026, which was again adjourned owing to passing of the 1^st Plaintiff’s father in Brazil.

17.  On 22 May 2026, the appeal was heard before this Court.

LEGAL PRINCIPLES

18.  It is trite that an appeal against master’s decision is dealt with by way of 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. The judge will give the weight it deserves to the previous decision of the master, but is in no way bound by it: Hong Kong Civil Procedure 2026 (“HKCP 2026”) at §58/1/2.

19.  The legal principles governing striking out are well-established and have been recently summarised in Sam Woo Bore Pile Foundation Limited v New Edex Construction Limited [2026] HKCFI 239 at §3.2:

(1)  Applications to strike out are only for plain and obvious cases. 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.

(2)  Insofar as the application is premised upon the proposition that there is no reasonable cause of action, the Court must proceed on the basis that the facts alleged in the statement of claim will be established. No evidence is admissible in relation to this limb of the application and the Court must address the matter simply on the basis of what is pleaded.

(3)  Insofar as “frivolous or vexatious” is concerned, the object of the rule is to stop cases which ought not to be launched. A proceeding is frivolous when it is not capable of reasoned judgment or is without foundation or cannot possibly succeed. A proceeding is vexatious when it is oppressive or lacks bona fides.

(4)  Insofar as “abuse of the process of the Court” is concerned, this is designed to ensure that the machinery of the Courts is used for bona fide purpose and is not abused.

DISCUSSION

20.  The Plaintiffs seek the following reliefs in the SOC:

(1)  A court-ordered restructuring of the Plaintiffs’ outstanding debt and a reduction in the interest rate, as per the provisions of the Money Lenders Ordinance (Cap 163) (“MLO”) and fair lending practices (“Restructuring Claim”); and

(2)  Compensation for emotional distress caused by the disrespectful and harassing calls (“Emotional Harm Claim”).

(A)  The Restructuring Claim

21.  In respect of the Restructuring Claim, the Plaintiffs pleaded the following in the SOC:

“We [i.e. the Plaintiffs] are writing to formally request a court hearing for the restructuring of our debt and adjustment of the interest rate associated with our outstanding balance with AEON Hong Kong [i.e. the Defendant]...

...

The financial challenges we are facing are a direct result of the COVID-19 pandemic and the subsequent economic downturn that has impacted not only me but also numerous others in our community. My wife, Ms. Soneghet Quitiba Freitas Noemia, and we remain very optimistic about overcoming these challenges soon, but we urgently require fair and reasonable terms to manage and recover from our financial obligations...

Despite our best efforts over the past three years, we are still struggling to recover our income and manage the high interest rates on our debt by the Defendant.

As per the provisions of the Money Lenders Ordinance (Cap. 163) and in alignment with fair lending practices, We believe a more manageable interest rate would enable me to meet my financial commitments more effectively.

...

We propose a fair and manageable interest rate that reflects our current financial situation and allows us to fulfill our obligations without undue hardship. We are committed to resolving this matter and ensuring that our debt is managed responsibly.

We are seeking a legal remedy to negotiate a fair interest rate on our outstanding debt.

Discuss this matter further and seek a resolution that is fair and equitable for both parties.”

22.  The Plaintiffs relied on sections 23 to 25 of the MLO and submitted that these provisions empowered the Court to reopen credit agreements and relieved borrowers from extortionate credit bargains.[2]

23.  In my view, the Restructuring Claim is wholly unarguable and discloses no reasonable cause of action.

24.  First, section 23 of the MLO is inapplicable. It provides that an unlicensed money lender shall not be entitled to recover any money lent by him or any interest in respect thereof. The Plaintiffs do not dispute that the Defendant is a licensed money lender.

25.  Second, section 24 of the MLO prohibits interest rates exceeding 48% per annum. The interest rates under the Restructured Loan Agreements are 33.21% (for the 1^st Plaintiff) and 32.68% (for the 2^nd Plaintiff), which do not exceed the statutory limit.

26.  Third, section 25 of the MLO allows the Court to reopen a transaction where (1) proceedings are taken for the recovery of the loan or the enforcement of any agreement, and (2) there is evidence which satisfies the Court that the transaction was extortionate.

27.  In the present case, the Defendant has not commenced any proceedings against the Plaintiffs for recovery of the loans under the Restructured Loan Agreements. There is also no prima facie evidence to indicate that the transaction was extortionate. The interest rates provided in the Restructured Loan Agreements have never exceeded 36% per annum. The presumption under section 25(3) of the MLO is therefore not engaged. I also do not discern any payment terms which are grossly exorbitant or otherwise grossly contravene ordinary principles of fair-dealing.

28.  At the Hearing, the 1^st Plaintiff referred me to two letters and contended that the Defendant had charged him more than the interest rate provided in the Restructured Loan Agreements:

(1)  In a letter dated 8 January 2025 issued by Messrs P C Woo & Co[3] to the 1^st Plaintiff, the outstanding balance as at 7 January 2025 is HK$106,390.

(2)  In another letter dated 17 January 2025 issued by New Bright Consultants Limited[4] to the 1^st Plaintiff, the outstanding balance was stated to be HK$138,307 plus late charge.

29.  Without knowing the basis or breakdown of the figures provided in those two letters, there is no basis to suggest that the transaction or the interest rate under the Restructured Loan Agreements was extortionate.

30.  I therefore agree with the Master’s decision to strike out the Restructuring Claim.

(B)  The Emotional Harm Claim

31.  The Plaintiffs contend that they suffered harassment and/or emotional distress under common law tort.[5] They rely on the following facts pleaded in the SOC: 

“My wife and I [i.e. the Plaintiffs] have been receiving repeated phone calls from individuals claiming to represent AEON [i.e. the Defendant]. These calls have been deeply disrespectful and distressing, causing significant emotional harm to us. The callers used inappropriate language and stated that overcharges of 30% would be added to the outstanding balance – an assertion we strongly dispute. If necessary, a detailed log of the harassing calls, including dates, times, and summaries of the conversations, can be delivered.”

32.  The Plaintiffs submitted that the Hong Kong courts recognise the tort of intentional infliction of injury and the tort of harassment. At the Hearing, the 1^st Plaintiff further submitted that the primary aim of the present action was to protect his family from the harassment inflicted by the Defendant.

33.  For the tort of intentional infliction of injury, the Court of Appeal in Lucy Michaels v Harbour Grand Hong Kong [2020] HKCA 705 at §84 referred to O (A Child) v Rhodes [2016] AC 219 and identified the three elements to be made out:

(1)  The conduct element: it requires words or conduct directed at the plaintiff for which there is no justification or cause;

(2)  The mental element: it requires an intention to cause harm or severe mental or emotional distress, mere recklessness does not suffice; and

(3)  The consequence element: it requires physical harm or recognised psychiatric illness.

34.  For the tort of harassment, the relevant principles have been recently discussed in Sir Elly Kadoorie (supra) at §§176, 183 and 187. To establish a cause of action in the tort of harassment, the victim must show:

(1)  The harasser, directly or through third parties, has, by a course of sufficiently repetitive, unreasonable and oppressive conduct, caused, and which he ought reasonably to know would cause, worry, alarm, emotional distress or annoyance to the victim;

(2)  The conduct complained of must, objectively, amount to harassment (in the ordinary sense of that word);

(3)  The harasser either intends to cause harm or injury to the victim by his harassing conduct, or is reckless as to whether the victim would suffer harm or injury as a result of the harassing conduct; and

(4)  The victim must have suffered some significant adverse emotional reaction. Thus, a plaintiff who has only suffered economic loss as a result of the harassing behaviour cannot bring proceedings for harassment.

35.  Mr Fan complained that the SOC lacked the necessary particulars to support any of the above tortious causes of action. He also submitted that even taking the Plaintiffs’ case that the Defendant had through its agents made those calls, the calls were lawful demands of repayments and the callers’ statements about a 30% overcharge were reasonably justified. He further submitted that the Plaintiffs had failed to plead, let alone give particulars, the requisite mental element of the Defendant (or its agents) with respect to each of the above tortious causes of action.

36.  The Court is generally slow to strike out a pleading if it is defective only in not containing particulars to which the other side is entitled. It is also trite that the Court is generally loath to strike out a case that involves a developing area of law as summary dismissal would deprive the Court of hearing full argument on the subject: HKCP 2026 at §§18/19/4 and 18/19/5.

37.  However, upon reviewing the SOC, it becomes strikingly apparent that the Plaintiffs have failed to plead the requisite mental element on the part of the Defendant (or its agents) for each of the above tortious causes of action, namely (1) “intention” for the tort of intentional infliction of injury; and/or (2) “intention” or “recklessness” for the tort of harassment.

38.  Although the Plaintiffs are unrepresented and cannot be expected to employ precise legal terminologies, they must nonetheless ensure their pleadings are clear. The duty to properly formulate pleadings rests squarely on the Plaintiffs. Litigants in person are not entitled simply to recount their narratives in a disorganised manner and leave it to the Court to identify and determine their legal rights. Pleadings are not to be treated as a set of instructions to the judge as if the judge were counsel for the unrepresented party. That said, the Court may, in its discretion, show some leniency towards unrepresented litigants by affording them an opportunity to get things right: Chan Kong v Chan Li Chai Medical Factory (Hong Kong) Ltd & Ors [2009] 2 HKLRD 455 at §17 (per Yuen JA); Law Ching Yu v Cheng Kwok Wing Leo [2019] HKCA 156 at §6 (per Poon JA).

39.  Whilst the Court may show leniency to an unrepresented litigant, this cannot relieve the Plaintiffs of the obligation to plead all the material facts supporting a reasonable cause of action. Even in his submissions, the 1^st Plaintiff merely complained that he had received repeated phone calls from the Defendant and contended that he did not see any intention on the part of the Defendant to solve the problem. He made no submission on the Defendant’s intention or recklessness to cause harm or injury. As a creditor, the Defendant was entitled to make lawful demands for repayment of the loan from the Plaintiffs. There is nothing inherently wrong in doing so. Without any pleaded facts as to the Defendant’s intention or recklessness, it cannot be said that the mere making of such demands necessarily carries with it the requisite intention or recklessness to found a claim in the aforementioned torts.

40.  For the above reasons, it is plain and obvious that the SOC disclosed no reasonable cause(s) of action for the Emotional Harm Claim and should be struck out on this ground alone. It is therefore unnecessary for me to consider the other grounds for striking out.

41.  I therefore also agree that the Emotional Harm Claim should be struck out.

(C)  Whether the action should be dismissed

42.  I have also considered whether the Court should strike out the SOC without dismissing the action. Where the original pleading does not disclose a reasonable cause of action but the evidence nevertheless reveals just enough underlying facts to enable a proper pleading to be formulated, the proper course would be to strike out the action but not to dismiss the claim, and to afford the plaintiff an opportunity to amend the statement of claim: Sun Focus Investment Ltd v Tang Shing Bor & Anor (unreported, HCA 538/2007, 5 October 2009) at §33 (per Recorder Shieh SC).

43.  This is not the case here. The Plaintiffs’ case (including the new evidence), even when viewed in the most favourable and lenient light, does not reveal sufficient underlying facts to enable them to formulate a proper cause of action under either the Restructuring Claim or the Emotional Harm Claim. I see no reason to believe that the Plaintiffs’ case could be salvaged by amendment of the SOC. Any such amendments would be far-reaching and so radical as to amount to a wholly new pleading, which would likely provoke a fresh action to strike out. In such circumstances, the correct course is to strike out: HKCP 2026 at §18/19/4.

44.  Furthermore, from a practical perspective, amendments take time and may give rise to further arguments. If the action is dismissed now, a fresh action (if the Plaintiffs so wish) can be commenced almost immediately. In Yu Hing Tong v Fung Hing Chiu Cyril [2016] 6 HKC 289 (CFI) at §§42-46, Recorder Coleman SC (as he then was) was not convinced that the amendment route would save costs, even though the plaintiff therein was legally represented and the potential amendments were relatively minor and unlikely to be controversial. Accordingly, the learned Recorder struck out the writ and statement of claim and dismissed the action.

45.  In the present case, as the Plaintiffs are unrepresented, any amendments to the SOC would likely take even more time. Such a course would neither be expedient nor cost-effective, and would be contrary to Order 1A rule 1 of the RDC.

46.  For the above reasons, I am of the view that the action should be dismissed.

(D)  Appeal against costs

47.  It is well established that a judge in chambers will not allow an appeal from a master’s costs order unless it was unreasonable or that the master erred in law: HKCP 2026 at §58/1/6.

48.  In my view, the learned Master’s exercise of discretion was entirely appropriate, and I can discern no error on his part. Since the learned Master struck out the SOC and dismissed the action, he was entitled to take the view that the Plaintiffs were liable for costs and to conduct summary assessment.

49.  In the premises, I will not disturb the costs order made by the learned Master.

CONCLUSION

50.  By reason of the aforesaid, I dismissed the Plaintiffs’ appeal against the Order.

51.  As regards the costs of the present appeal, there is no reason why costs should not follow the event. Having heard the parties’ submissions on costs at the Hearing, I ordered that the Plaintiffs do pay the Defendant’s costs of and incidental to the appeal, summarily assessed at HK$88,000.

52.  It remains for me to thank Mr Fan for his assistance to the Court.