SUCCESS LANE DEVELOPMENT LTD v. IFC DEVELOPMENT (SUITE) LTD AS AGENT FOR IFC DEVELOPMENT LTD

DCCJ 3838/2023

[2024] HKDC 2184

IN THE DISTRICT COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

CIVIL ACTION NO. 3838 OF 2023

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

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

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

DECISION

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

A.  Introduction

1.  On 15^th April 2024, Master Vincent Kee struck out the Plaintiff’s claims in this action, and ordered costs against the Plaintiff, which was summarily assessed on an indemnity basis.

2.  By the Decision dated 14^th August 2024 (see [2024] HKDC 1396)[1], I dismissed the Plaintiff’s appeal against Master Vincent Kee’s decision as well as the Plaintiff’s application to amend the statement of claim pursuant to the summons dated 9^th August 2024. I also ordered indemnity costs against the Plaintiff, which I summarily assessed at HK$120,000[2] pursuant to the directions set out in paragraph 38 of the Decision.

3.  In my view, the Plaintiff’s claims herein were unarguably bad and thus liable to be struck out. For the reasons elaborated in the Decision, I was of the view that:

(1)  The Plaintiff, which is a company with no feeling, was incapable of suffering “diminished enjoyment” in respect of the three Registered Guests’ dissatisfaction of the services provided by the Defendant. Thus, the Plaintiff did not suffer, and could not have suffered, any loss and damage. (see Decision, para 22(1)-(4));

(2)  It would be abusive for the Plaintiff to seek nominal damages and/or declaration in the present proceedings only as (i) the District Court hears civil disputes of values between HK$75,000 and HK$3 million; and (ii) the Long Staying Agreements had expired already, and there was no suggestion that the present proceedings would clarify the existing rights and obligations of the parties. (see Decision, para 22(5);

(3)  There was no contractual provision stipulating that the Defendant was obliged to provide an “ideal environment” to the Registered Guest. As a matter of contractual construction, the “Welcome Message” in the Service Guide was not a contractual term at all. (see Decision, para 23);

(4)  The Plaintiff was unable to show that the Defendant breached any express terms or provisions in the Long Staying Agreements and/or the Service Guide (see Decision, para 24);

(5)  There was no implied contractual term requiring the Defendant to provide an “ideal environment” and/or “quality services”. These notions were hopelessly vague, incapable of being defined/ascertained and entirely subjective. Further, without the alleged implied term, the Long Staying Agreements would still be effective and/or operative. (see Decision, para 25)

4.  On 28^th August 2024, the Plaintiff took out a summons seeking leave to appeal against my Decision.

5.  At the present hearing, the Plaintiff, through its director Madame Jesse Yung, acts in person. Mr Ernst Ng represents the Defendant.

B.  Legal Principles on Leave to Appeal

6.  Section 63A of the District Court Ordinance (Cap 336) stipulates that no leave to appeal shall be granted unless the proposed appeal has a reasonable prospect of success or there is some other reason in the interests of justice that the appeal should be heard.

7.  It is trite that the party that seeks to appeal bears the burden of satisfying the Court that his or her appeal has a reasonable prospect of success. This means an appeal with prospects that are more than fanciful but which do not need to be shown to be probable: SMSE v KL [2009] 4 HKLRD 125 at para 17.

8.  As Kwan JA (as she then was) pointed out in秦錦釗 及 香港特別行政區 [2018] HKCA 167 at para 8, in light of the function of the Court of Appeal, it would be futile for an appellant to rehearse the contentions that were rejected by the first instance judge. Instead of doing so, the appellant should focus on the first instance judge’s reasoning and pinpoint the error in respect thereof. See also李智慧 及 昆士蘭保險（香港）有限公司 [2021] HKCA 984 at para 11 (per Chow JA).

C.  Deliberation

9.  The proposed grounds of appeal are set out and elaborated in the Plaintiff’s written submissions dated 12^th December 2024.

Proposed Ground 1

The Contentions based on the Court of Appeal’s Judgment in Sir Elly Kadoorie

10.  As pointed out in paragraph 22(3) of the Decision, the Plaintiff failed to make pleas and put forward evidence to explain how it could have suffered “diminished enjoyment” and/or any other kind of loss and damage. In paragraph 22(1), I pointed out that the Plaintiff, which is a company, is an artificial creation with no feeling. As such, it could not have suffered “diminished enjoyment” in respect of the dissatisfaction alleged by the three Registered Guests. In this connection, I referred to Sir Elly Kadoorie & Sons v Bradley [2023] 3 HKLRD 587 at para 66 (per DHCJ Herbert Au-Yeung, as he then was).

11.  In its written submissions, the Plaintiff points out that shortly[3] after I gave the Decision, the Court of First Instance’s decision in Sir Elly Kadoorie was overturned by the Court of Appeal: see [2024] HKCA 747; [2024] 4 HKLRD 428. The Plaintiff then goes on to contend I erred in concluding that the Plaintiff could not have suffered “diminished enjoyment”.

12.  The Plaintiff’s contention has no merit and is based on its misunderstanding of the Court of Appeal’s judgment in Sir Elly Kadoorie.

13.  As Mr Ernest Ng (for the Defendant) correctly pointed out, the issue before the Court of Appeal in Sir Elly Kadoorie was “whether a corporate entity can be a victim of harassment, and may sue in the tort of harassment in its own right” (see Court of Appeal’s judgment at para 61 (per Chow JA)).

14.  However, in the present proceedings, the issue was whether the Plaintiff (being a company) could seek “contractual damages”[4] based on the alleged dissatisfaction of the three Registered Guests[5] who were nominated to use the facilities and services provided by the Defendant.

15.  In Sir Elly Kadoorie, having examined counsel’s submissions as well as the local and overseas jurisprudence (see judgment at paras 60-68), Chow JA held that since a corporation may need to incur expenses to counteract or abate the harassment that causes worry, distress or annoyance to its employees, it is arguable that a corporation may bring an action for harassment in its own capacity (see judgment at paras 62(1) and 67(1)). The Court of Appeal did not suggest that a company, being an artificial legal creation, is capable of having emotion and/or feeling upset. On the contrary, the Court of Appeal’s analysis was based on the premise that only a natural person (such as a company’s employee) is capable of suffering “worry, emotional distress or annoyance”.

16.  In the premises, when Sir Elly Kadoorie is properly understood, it is apparent that the Court of Appeal’s reasons for overturning the first instance decision do not support the Plaintiff’s claims in this action at all.

17.  At the present hearing, Madame Jesse Yung (for the Plaintiff) keeps emphasizing that the Plaintiff provided accommodation for its director. This assertion has no substance and no merit at all. There was no plea and no evidence suggesting that the business or operation of the Plaintiff was adversely affected because the three Registered Guests were discontented with the Defendant’s services.

18.  Whilst the only substantive relief sought by the Plaintiff in this action was contractual damages[6], the Plaintiff failed to make out a case that it had suffered loss and/or damage based on “diminished enjoyment”. For this reason alone, the Plaintiff’s claims in this action should be struck out and dismissed.

Declaration

19.  At the previous hearing on 14^th August 2024, Madame Jesse Yung argued that even if the Plaintiff did not suffer any loss and damage, it was still entitled to seek nominal damages and/or declaratory reliefs against the Defendant.

20.  Against this background, in paragraph 22(5) of the Decision, I explained why it would be abusive for the Plaintiff to seek nominal damages and/or declaratory reliefs in the present proceedings only.

21.  The Plaintiff now contends I overlooked the court’s wide jurisdiction to grant declaratory reliefs and misapplied Koo Ming Kown v Rev Mr Mok Tong Ting [2018] HKCFI 967 at paras 19-20 (per DHCJ To).

22.  This complaint has no substance.

23.  It is trite that the courts would not adjudicate academic controversies that serve no useful purposes and do not affect the parties’ interest. Koo Ming Kown is one of the cases where the court applied this well-established principle. In the present case, the Plaintiff failed to explain how the adjudication of its purported Complaints might serve any useful purpose when the Long Staying Agreement had expired already.

24.  Knowing the difficulty that it faces, the Plaintiff seeks to advance a new contention in its written submissions. It is suggested that if the court makes a declaration, this will facilitate the assessment of damages.

25.  This new contention is not only illogical, but also without basis. It is not even arguable that the Plaintiff has suffered loss and damage at all. There is simply nothing to assess.

Conclusion

26.  The contentions under the first proposed ground of appeal are wholly unmeritorious and unarguable.

Proposed Ground 2

27.  The Plaintiff says that I erred in concluding that the “Welcome Message” in the Service Guide did not constitute a contractual term. The Plaintiff contends that my approach to contractual interpretation was flawed, in that I overlooked the background against which the parties entered into a contractual relationship.

28.  This contention has no substance. The Plaintiff fails to pinpoint any factual matters that support its suggestion that the Defendant’s greeting under the “Welcoming Message” in the Service Guide constituted a contractual term.

29.  In any event, the purpose of contractual interpretation is to ascertain the objective contractual intention of the parties. The Plaintiff cannot identify any palpable error in respect of the analysis set out in the Decision. There is no point in regurgitating the contentions that I did not accept.

30.  The second ground of appeal is wholly unarguable and unmeritorious. In any event, having said the Plaintiff has not suffered any loss and damage, it would be futile to allow the Plaintiff to pursue the same.

Proposed Ground 3

31.  The Plaintiff suggests that I conducted a mini trial on affidavit in respect of the Complaints and that I misunderstood some of the factual matters in relation thereto.

32.  Contrary to the Plaintiff’s incorrect suggestion, I did not conduct a mini trial; nor did I embark on a fact-finding exercise. In paragraph 24 of the Decision, I simply explained why none of the express terms and provisions of the Long Staying Agreements and the Service Guide supported the Plaintiff’s claims. Thus, even assuming that the Plaintiff’s allegations regarding the Complaints were true, the Plaintiff’s claims still failed.

33.  For completeness, it should be pointed out that there was no misunderstanding about the factual matters in relation to the Complaints. I was fully aware of the Plaintiff’s pleas, proposed amendments and allegations contained in the affirmations. However, for the sake of brevity and proportionality, it would not be desirable to set out all the details in respect of the Complaints, and it sufficed to provide a summary in paragraph 14 of the Decision.

34.  The third ground of appeal is entirely unarguable and unmeritorious. In any event, having said the Plaintiff has not suffered any loss and damage, it would be futile to pursue the same.

Proposed Ground 4

35.  The Plaintiff suggests that I failed to apply the legal principles on striking-out and to take the Plaintiff’s case to the highest. As a result, I erred in finding that the Plaintiff’s claims are frivolous, vexatious and an abuse of process.

36.  The Plaintiff’s contention has no substance. The legal principles on striking-out were set out in paragraph 18 of the Decision, and I dealt with the matter on the basis that all the factual allegations raised by the Plaintiff were substantiated. Notwithstanding so, the Plaintiff’s claims still failed to take off the ground.

37.  The fourth ground of appeal is also entirely unarguable and unmeritorious.

Proposed Ground 5

Request for a further Opportunity to revise the Amendments in the Statement of Claim

38.  The Plaintiff contends that I should have allowed it to have a further opportunity to revise the proposed amendments to the statement of claim at the hearing on 14^th August 2024.

39.  As pointed out in paragraph 30 of the Decision, I declined to exercise my discretion in favour of the Plaintiff for the following reasons:

(1)  Madame Jesse Yung, who represented the Plaintiff at the hearing on 14^th August 2024, was unable to explain what the revised amendments were about, and I failed to see how the Plaintiff’s claims could be salvaged by further amendments;

(2)  The Plaintiff had already attempted to salvage its claim by seeking to amend the statement of claim, but the attempt was futile. It would be unfair to the Defendant if the Plaintiff were allowed to drag on the present proceedings further.

40.  Whilst Plaintiff disagrees with my conclusion, it fails to explain why my exercise of discretion was plainly wrong, unreasonable and/or erroneous.

41.  Having considered the written submissions advanced by the Plaintiff for present purposes, I am still firmly of the view that its claims in the present action are utterly hopeless, frivolous, vexatious and incapable of salvaged. Thus, the Plaintiff should not be allowed to drag on the present proceedings any further.

42.  For completeness, it should be pointed out that by the letter dated 12^th December 2024, the Plaintiff seeks to put forward a revised draft amended statement of claim. In paragraph 32 of this new document, the Plaintiff makes a new allegation that it paid HK$120,000 to the director’s family as compensation in respect of their failure to enjoy the facilities and services provided by the Defendant.

43.  This belated allegation is obviously dubious, self-serving and devoid of particulars. In any event, as Mr Ernst Ng pointed out, this is the Plaintiff’s application for leave to appeal against my Decision on 14^th August 2024. Bearing in mind that the proceedings had already come to an end, I agree with Mr Ng’s submissions that it would not be appropriate to proceed on the basis of the new allegations made by the Plaintiff. After all, the Plaintiff must not be allowed to drag on these proceedings by creating complications, and the court must remain vigilant to ensure that its process would not be abused.

Appeal against the Costs made by Master Vincent Kee

44.  The Plaintiff contends that I erred in upholding the costs order made by Master Vincent Kee as I misunderstood the basis of his decision.

45.  Contrary to the Plaintiff’s false suggestion, I did not take the view that Master Kee ordered indemnity costs against the Plaintiff because he believed that the Plaintiff’s litigation conduct was unwarranted.

46.  The reasons of the Master Kee are recorded in a note that was signed[7]. Nowhere was it suggested that the Master awarded indemnity costs on the basis that the Plaintiff’s conduct was unwarranted.

47.  As clearly stated in paragraph 33 of the Decision, I was aware that Master Kee took the view that the Plaintiff’s case was unarguable, and this was the basis for ordering indemnity costs against the Plaintiff.

48.  Having considered the skeleton submissions from the Plaintiff’s former counsel and having heard Madame Jesse Yung as well as the Defendant’s legal representatives at the hearing on 14^th August 2024, I was (and still am) firmly of the view that Master Kee was correct to (i) order indemnity costs against the Plaintiff; and (ii) to conduct gross-sum assessment.

49.  I could not discern any errors on the part of Master Kee. I cannot see how the Plaintiff can seriously suggest that I was wrong to affirm Master Kee’s decision on costs.

Setting aside the Costs Order made by Master Vincent Kee

50.  The Plaintiff alleges that Madame Jesse Yung was absent from the hearing on 15^th April 2024 due to sickness. On this basis, it is argued that I erred in failing to set aside the costs order made by Master Kee pursuant to order 32, rule 5.

51.  The Plaintiff’s contention is wholly misconceived.

52.  As early as 16^th April 2024, the Plaintiff took out a summons seeking to set aside Master Vincent Kee’s order pursuant to order 32, rule 5. By the order dated 20^th May 2024, Master Ross Li dismissed the Plaintiff’s application. Had the Plaintiff been aggrieved by Master Li’s decision, the Plaintiff should have pursued an appeal against such decision. This was never done.

53.  The Plaintiff’s notice of appeal dated 25^th April 2024, which was heard by me at the hearing on 14^th August 2024, had nothing to do with Master Ross Li’s decision on 20^th May 2024 as well as the application seeking to set aside Master Kee’s order pursuant to order 32, rule 5.

54.  Instead, the said notice of appeal and the hearing on 14^th August 2024 were concerned with the question whether Master Vincent Kee’s decision should be affirmed or not. For the reasons set out in the Decision, I took the view that Master Kee was correct to strike out the Plaintiff’s claims in this action. I also disagreed that there was any error on the part of Master Kee insofar as the question of costs was concerned. Thus, I refused to disturb his costs order.

55.  I cannot see how the Plaintiff can seriously suggest that there was any breach of the principles of natural justice and/or procedural fairness. The Plaintiff’s complaint is unwarranted.

Conclusion

56.  The contentions under the fifth proposed ground of appeal are wholly unmeritorious and unarguable.

Proposed Ground 6

57.  The Plaintiff contends that I should not have ordered indemnity costs in favor of the Defendant and that my ruling was erroneous.

58.  As pointed out in paragraph 36 of the Decision, I took the view that the Plaintiff’s case was unarguably bad, utterly unmeritorious and the court’s process was abused. In the circumstances, it was plainly appropriate to order indemnity costs in order to show the court’s approval of the Plaintiff’s litigation conduct.

59.  The Plaintiff is unable to identify any palpable error in respect of my exercise of discretion.

60.  Ground 6 is wholly unarguable and unmeritorious.

Proposed Ground 7

61.  The Plaintiff contends that I erroneously conducted a gross sum assessment based on the inflated figures and inflated hourly rates provided by the Defendants’ solicitors.

62.  There is neither truth nor substance in this complaint. I did bear in mind that this was a District Court case. Whilst I adopted a broach brush approach, I took into account the relevant circumstances, including the complexity of the dispute, the question of proportionality, the amount claimed by the Defendant and the objections raised by the Plaintiff. Indeed, whilst the Defendant claimed an amount of HK$218,870, I only allowed HK$120,000.

63.  I cannot see how the Plaintiff can seriously suggest that the gross sum assessment that I conducted was flawed and/or erroneous.

D.  Order and Disposition

64.  For all the above reasons, I am of the view that the Plaintiff’s intended appeal does not have a reasonable prospect of success. I am also unable to see any reason in the interests of justice why the intended appeal should be heard.

65.  Accordingly, I dismiss the Plaintiff’s summons dated 28^th August 2024.

66.  Whilst the Plaintiff’s application is utterly unmeritorious, the barrel-scrapping approach adopted by the Plaintiff is also deplorable. In order to show the Court’s disapproval of such litigation conduct, it would be appropriate to order indemnity costs against the Plaintiff.

67.  I order the Plaintiff to pay the Defendant’s costs in respect of the said summons dated 28^th August 2024 forthwith, summarily assessed on an indemnity basis at HK$68,000.

68.  I express my gratitude to Mr Ernest Ng for his helpful assistance.