LOKE MEI YUK, MIMI v. THE HONGKONG AND SHANGHAI BANKING CORPORATION LTD AND ANOTHER

HCA 1819/2006

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

ACTION NO. 1819 OF 2006

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D E C I S I O N

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1.  This is an appeal against an order of Master Roy Yu made on 4 January 2007 in the Plaintiff’s absence.  By this order Master Yu, pursuant to the 1^st Defendant’s striking out summons dated 9 September 2006, struck out the Statement of Claim and dismissed the action as against the 1^st Defendant.  The Master also ordered the Plaintiff to pay the 1^st Defendant the costs of the action including the costs of the 1^st Defendant’s striking out summons.

2.  There was another summons issued by the Plaintiff on 20 September 2006 seeking separate trials, consolidation of this action with other actions including her husband’s petition for divorce and the striking out of the 2^nd Defendant’s defence and counterclaim.  This summons was identical to another summons also issued by the Plaintiff on 18 September 2006.  The summons of 18 September has been adjourned by Registrar Chan on 4 October 2006 to be heard after the hearing of the 1^st Defendant’s striking summons referred to above.  The identical summons of 20 September was also heard before Master Yu on 4 January 2007 and the Master dismissed it with costs against the Plaintiff.

3.  The Plaintiff’s husband and the 2^nd Defendant are both employed by the 1^st Defendant.  They have been so employed since before November 2001.  They apparently came to know each other in the course of work.  According to an affidavit of the Plaintiff sworn on 23 October 2006, the Plaintiff’s husband and the 2^nd Defendant started to have an affair since about November 2001.

4.  According to the Plaintiff’s affidavit sworn on 23 October 2006, she and her husband had signed a deed of separation on 5 August 2002.

5.  The 2^nd Defendant had, with the help of mortgage finance provided by the 1^st Defendant, completed her purchase of certain premises in about July 2002.  The Plaintiff’s husband and the 2^nd Defendant have been and are still cohabiting in these premises.  The Plaintiff’s husband has petitioned for divorce and the proceedings are contested by the Plaintiff. 

6.  The Plaintiff pleaded in her statement of claim:

“1.  This case has brought about my loss of teaching profession and related income, amounting to HK$3,000,000.

2.      This case has brought about my substantial increase of expenditure to restore my health and to pay the suit costs of the petition for divorce raised by my husband, amounting to HK$400,000.

3.      I was compelled to sell my holiday flat in Macau on 17 June 2003 at a loss of HK$500,000.

4.      I have lost HK$1,000,000 since Ms Wong’s intervention in my domestic economy from April 2002.

5.      I may lose the chance of acquiring HK$3,100,000 from my husband if the marriage were not dissolved and my husband works as usual in the HSBC.

6.      I have lost my personal privacy, reputation, family status, my husband’s usual love and care for me, my freedom from fear and want, and my freedom of enjoyment of good health, family love, usual family, cultural and social life.”

7.  The Plaintiff also pleaded in her defence and counterclaim as follows:

“The cause of my action is due to the 1^st Defendant’s vicarious liability for the 2^nd Defendant’s infringement of my family goodwill and my customary rights by marriage, causing further damages to my family and social relationship with my husband, our relatives and friends, giving rise to my loss of property and my further rights to additional property to which I shall be entitled.”

8.  She further said in an affidavit made on 18 September 2006:

“Under Order 19, rule 3 of RHC, I apply to the Court for my claim for unliquidated damages to be paid by the 1^st Defendant due to his vicarious liability for the 2^nd Defendant’s violation of my marriage and family, …”

She also said in her affidavit of 16 October 2006:

“The 1^st Defendant’s Vicarious Liability in Tort is imputed to the 2^nd Defendant’s Malicious Falsehood and Nuisances, causing ensuing damages to the safety and interests of the Plaintiff.”

She also said in her affidavit of 23 October 2006:

“The 2^nd Defendant is a colleague of the Plaintiff’s husband, Mr Lau Song Wah, who is the Petitioner of Case No. FCMC 11418 of 2004.  They are the 1^st Defendant’s employees. …  Since November 2001, the 2^nd Defendant actively included herself in the Plaintiff’s marriage and family by making frequent telephone disturbances and continuously soliciting the Plaintiff’s husband regardless of the Plaintiff’s existence and objection.  Subsequently, she developed mistrusts between the Plaintiff and her husband and then compelled Mr Lau to separate himself from the Plaintiff by threatening to commit suicide.  She has therefore infringed section 4 of Marriage Reform Ordinance (Cap. 178).  On 23/07/2002, the 2^nd Defendant completed registration in the Land Registry of her present property used as ‘matrimonial home’ for her subsequent cohabitation with the Plaintiff’s husband, Mr Lau.  This was because the 1^st Defendant had promised the 2^nd Defendant a loan of up to 90% of the purchase price of her then prospective property.  The Plaintiff was requested to sign a Deed of Separation with her husband under the compulsion from the 2^nd Defendant who threatened to cut the Plaintiff’s domestic income.  The Plaintiff could not but sign the Deed of Separation with Mr Lau on 05/08/2002.  After this, the 2^nd Defendant mortgaged her property to the 1^st Defendant.  The documentary execution of the mortgage was registered on 28/08/2002 and was witnessed by the 1^st Defendant’s representative, Johnson, Stokes & Master Solicitors.  The 2^nd Defendant has directly caused damages to the safety and interests of the Plaintiff by her malicious falsehood and nuisances.  As the 2^nd Defendant’s employer, the 1^st Defendant is vicariously liable in tort for the 2^nd Defendant’s making damages to the Plaintiff.  The 2^nd Defendant has incurred the Plaintiff a financial loss of about 8 million Hong Kong Dollars as stated in the Plaintiff’s Computation of Statement of Claim filed on 25/09/2006.”

9.  The Plaintiff’s ground of complaint is the affair between the 2^nd Defendant and her husband.  As pointed out by the 1^st Defendant’s solicitors, the Plaintiff’s alleged causes of action against the 1^st Defendant are:

(1)     The 1^st Defendant’s vicarious liability to the Plaintiff for the acts of its employee the 2^nd Defendant; and

(2)     Being the mortgagee of the 2^nd Defendant’s property.

10.  After the Plaintiff has served the writ of summons on the 1^st Defendant, the solicitors of the 1^st Defendant filed a Notice of Acknowledgement of Service on 30 August 2006.  They wrote to the Plaintiff on the same day asking her to withdraw her claim against the 1^st Defendant as they thought it had no basis.  The Plaintiff did not withdraw the claim against the 1^st Defendant and the 1^st Defendant’s solicitors issued a summons on 9 September 2006 to strike out the Plaintiff’s statement of claim under O.18 r.19 of the Rules of the High Court.  The grounds relied on by the 1^st Defendant are:

(1)     The Statement of Claim discloses no reasonable cause of action, or

(2)      It is frivolous and vexatious, or

(3)      It is an abuse of the process of the Court.

The summons further seeks the dismissal of the action as against the 1^st Defendant with costs of the application.

11.  On 18 September 2006, the Plaintiff also issued a summons seeking separate trials, consolidation of this action with other actions including her husband’s petition for divorce and striking out the 2^nd Defendant’s defence and counterclaim.

12.  Both summonses were heard on 20 September 2006 before Master Ho.  The Master adjourned the 1^st Defendant’s striking out application to a day to be fixed.  He also adjourned the Plaintiff’s summons of 18 September to 4 October 2006 for the Plaintiff to prove service of the same on the 2^nd Defendant.  As I have mentioned above, the Plaintiff on 20 September 2006 issued another summons.  That was identical to her summons of 18 September which has been adjourned to 4 October 2006.

13.  The 1^st Defendant’s solicitors then wrote to the Plaintiff on 21 September 2006 inviting the Plaintiff to attend the court on 28 September 2006 at 11:00 a.m. to fix a date for the hearing of the 1^st Defendant’s striking out summons.  The Plaintiff did not attend the court on 28 September 2006 and the hearing date was fixed on 4 January 2006 in her absence.  (The Plaintiff had to attend the Family Court on that day because of the divorce proceedings brought by her husband.)

14.  The Plaintiff then issued several other summonses including a summons for summary judgment against the 1^st Defendant which was heard before Master Lung on 16 October 2006.  Master Lung adjourned this summons to a date to be fixed after 4 January 2007 for argument.

15.  The Plaintiff appealed against Master Lung’s direction.  The appeal was heard before Mr Justice Chung on 10 November 2006.  Mr Justice Chung adjourned the appeal part-heard to a date to be fixed. 

16.  On 28 December 2006, the Plaintiff returned to the 1^st Defendant’s solicitors all the documents served on her for the striking out hearing on 4 January 2007.  She also made an affidavit on 29 December 2006 saying that she would not appear at the hearing on 4 January 2007.

17.  The Plaintiff did not appear before Master Roy Yu on 4 January 2007.  Master Yu then made the striking out order and dismissed the Plaintiff’s summons of 20 September 2006 as referred to in paragraphs 1 and 2 above.  The Plaintiff appealed against this decision.

18.  In considering this appeal, I bear in mind that it is only in the plain and obvious case that the court should strike out any pleading without a trial.  I would not conduct a trial upon the affidavits.  I would only strike out a pleading that is obviously unsustainable, unarguably bad and the claim is impossible to succeed (see para. 18/19/4 of Hong Kong Civil Procedure 2007). 

19.  On vicarious liability, para. 6-01 of Clerk and Lindsell on Torts, 19^th edition says that:

“The act of authorisation or ratification renders the tort the act of the authoriser or rectifier, so that he becomes vicariously liable.  In addition, however, vicarious liability can also be imposed in respect of acts that have been neither authorised nor ratified if, according to the rather vague test laid down by the House of Lords in Lister v Hesley Hall Ltd [2002] 1 AC 215, the employee’s tort was ‘so closely connected with his employment that it would be fair and just to hold the employer vicariously liable’”

20.  I also refer to paras 6-25 to 6-26 of Clerk and Lindsell:

“6-25  Where the relationship of employer and employee exists, the employer is liable for the torts of the employee so long only as they are committed in the course of the employee’s employment.  …

6-26    The question whether a wrongful act is within the course of employment is ultimately a question of fact, and no simple test is appropriate to cover all cases.  The hitherto most frequently adopted test was that propounded by Salmond; namely, that a wrongful act is deemed to be done in the course of employment …

‘If it is either (1) a wrongful act authorised by the master, or (2) a wrongful and unauthorised mode of doing some act authorised by the master.  It is clear that the master is responsible for acts actually authorised by him: for liability would exist in this case, even if the relation between the parties was merely one of agency, and not one of service at all.  But a master, as opposed to the employer of an independent contractor, is liable even for acts which he has not authorised, provided they are so connected with acts which he has authorised that they may rightly be regarded as modes — although improper modes — of doing them.’”

21.  Bearing in mind this approach, I do not think the development of an affair between the 2^nd Defendant and the 1^st Plaintiff’s husband can be said to be an act authorised by the 1^st Defendant, or a mode of doing any act authorised by the 1^st Defendant.  It is purely a personal matter between the 2^nd Defendant and the Plaintiff’s husband.  It has nothing to do with the 1^st Defendant.  I do not think that it fair or just to hold the 1^st Defendant vicariously liable for the damage that the Plaintiff has suffered as a result of the affair.

22.  For this reason, I take the view that the Plaintiff’s claim against the 1^st Defendant as based on vicarious liability is impossible to succeed and thus unsustainable.

23.  On the provision of mortgage finance by the 1^st Defendant to the 2^nd Defendant, the Plaintiff’s claim is even more deficient.  The 1^st Defendant merely provided the mortgage finance as a financier although at more favourable interest rate because of the employer and employee relationship, but there is nothing to suggest that this provision of mortgage finance was in anyway related to the affair between the 2^nd Defendant and the Plaintiff’s husband. 

24.  I am of the view that Master Roy Yu has rightly struck out the Statement of Claim and the action as against the 1^st Defendant.  Although the Plaintiff’s appeal for summary judgment before Mr Justice Chung was still part-heard, this should not affect the power of Master Yu to striking out a hopeless claim. 

25.  Regarding the dismissal of the Plaintiff’s summons issued on 20 September 2006, that summons was identical to her summons dated 18 September 2006.  The earlier summons has been scheduled to be heard after the hearing of the 1^st Defendant’s striking summons.  I do not think it right for the Plaintiff to have issued two identical summonses for the same relief.  It was right for Master Yu to strike out the later one.

26.  For the above reasons, I dismiss the Plaintiff’s appeal.  I also make a costs order nisi that the costs of the appeal be paid by the Plaintiff to the 1^st Defendant.