LAM PO YEE v. YU SHUI MUI

HCA 2092/2024

[2025] HKCFI 4245

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

ACTION NO 2092 OF 2024

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REASONS FOR DECISION

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INTRODUCTION

1.  On 25 February 2025, the Plaintiff in this action took out a summons to stay its own action against the Defendant (the “Stay Summons”). Having heard the parties’ submissions, I dismissed the Stay Summons with an indemnity costs order and grossly assessed the same at HK$200,000. Now I give my reasons.

MATERIAL FACTS

2.  The material facts of the present case are conveniently and helpfully set out in Sections C-E of Mr Justice K Yeung’s decision dated 14 July 2025 in Lam Po Yee v Yu Shui Mui (余水梅) [2025] HKCFI 2734.

3.  On 18 October 2024, the Plaintiff commenced the present proceedings by issuing a generally endorsed writ of summons (the “Writ of Summons”).

4.  This Court had previously dismissed the Plaintiff’s application for an interim injunction against the Defendant.

5.  The Plaintiff then applies to this Court to stay her own action pending an arbitration to be commenced by her. Fundamentally, I am of the view that the Plaintiff must make up her mind as to whether, in relation to her claims against the Defendant, she wants to proceed by way of an arbitration or to prosecute the present High Court proceedings. Judicial resources are limited. If the Plaintiff would like to proceed by way of an arbitration, she could well withdraw the present High Court proceedings. This Court needs persuasion and good reasons to allow the Plaintiff to first commence the present High Court proceedings and then to proceed to an arbitration.

6.  Mr Lim for the Plaintiff was not able to give any satisfactory answer as to what additional benefit the Plaintiff can achieve by maintaining the present High Court proceedings whilst proceeding with an arbitration against the Defendant.

7.  If it is thought that the present High Court proceedings can be kept alive so that the Plaintiff can use that as a platform to apply for specific discovery of documents, I am of the view that that is an abuse of the process of the Court. The Plaintiff could apply for discovery of documents as well in her intended arbitration proceedings.

8.  I am informed that at the call-over hearing, Madam Justice Mimmie Chan also observed that the Plaintiff should consider if the matters in dispute should be resolved by arbitration, the Plaintiff could simply withdraw the present action.

9.  Mr Siu for the Defendant pointed out that the Plaintiff alleged that the Defendant was a gamer in the mobile game 三國志（戰略版) (the “Mobile Game”) who made defamatory statements in relation to the Plaintiff. The Plaintiff states in the Writ of Summons that her claim is “Torts”, but nonetheless claims that the dispute should be referred to arbitration pursuant to service agreement allegedly entered into between the Defendant and the service provider of the Mobile Game, i.e. Qookka (the “Service Agreement”). The Plaintiff is not a party to the Service Agreement.

LEGAL PRINCIPLES

10.  Section 20 of the Arbitration Ordinance (Cap. 609) provides that:

“Article 8 of the UNCITRAL Model Law, the text of which is set out below, has effect—

“(1) Article 8. Arbitration agreement and substantive claim before court

(1) A court before which an action is brought in a matter which is the subject of an arbitration agreement shall, if a party so requests not later than when submitting his first statement on the substance of the dispute, refer the parties to arbitration unless it finds that the agreement is null and void, inoperative or incapable of being performed.

(2) Where an action referred to in paragraph (1) of this article has been brought, arbitral proceedings may nevertheless be commenced or continued, and an award may be made, while the issue is pending before the court.”.” (Emphasis added.)

11.  In determining whether to grant the stay, it is also necessary to satisfy the following questions:

(1)  Is there an arbitration agreement between the parties; (“Condition 1”)

(2)  Is the clause in question capable of being performed; (“Condition 2”)

(3)  Is there in reality a dispute or difference between the parties; (“Condition 3”)

(4)  Is the dispute or difference between the parties within the ambit of the arbitration agreement. (“Condition 4”)

See: Polytec Overseas Ltd And Another v Grand Dragon International Holdings Co Ltd And Others [2017] 3 HKLRD 258 at §23.

ANALYSIS AND DETERMINATION

12.  I agree that for the Contract (Rights of Third Party) Ordinance (Cap. 623) (the “Ordinance”) to be engaged, the Plaintiff must first show that there is an agreement between the Defendant and the service provider, namely, Qookka; and the agreement contains an arbitration clause.

13.  The Plaintiff submitted that as she had entered into an agreement with Qookka, therefore the Defendant must also have entered into an agreement with Qookka, and such agreement must have contained an arbitration clause. I agree with Mr Siu that the Plaintiff failed to discharge her burden of proof in establishing this fact. First, the Plaintiff is not able to produce the agreement between Qookka and herself. She was only able to produce various “printouts” obtained from Qookka. Secondly, there are at least three different versions of the Service Agreement some of which do not contain any arbitration clause.

14.  Secondly, as a matter of law, even assuming that there is an arbitration agreement between the Defendant and Qookka, the Plaintiff is not entitled to rely on the Ordinance. To begin with, the Plaintiff is not a party to the Service Agreement between the Defendant and Qookka.

15.  Sections 4 and 12 of the Ordinance provide:

“4. Third party’s right to enforce contractual term

(1) A third party may enforce a term of a contract (including a term that excludes or limits liability) if—

(a) the contract expressly provides that the third party may do so; or

(b) the term purports to confer a benefit on the third party.

(2) The third party must be expressly identified in the contract by name, as a member of a class or as answering a particular description.

(3) Subsection (1)(b) does not apply if, on a proper construction of the contract, the term is not intended to be enforceable by the third party.

(4) The enforcement of the term by a third party under this section is subject to any other term of the contract relevant to the term.

…

12. Arbitration agreement

(1) Subsection (2) applies if a third party’s right to enforce a term of a contract under section 4 is subject to an arbitration agreement.

(2) As regards a dispute between the third party and the promisor relating to the enforcement of the term by the third party, the third party is treated as a party to the arbitration agreement for the purposes of the Arbitration Ordinance (Cap. 609).

(3) Subsection (2) does not apply if, on a proper construction of the contract, the third party is not intended to be so treated.

(4) Subsections (5) and (6) apply if—

(a) a third party may enforce a term of a contract under section 4;

(b) the term—

(i) provides that one or more descriptions of dispute between the third party and the promisor is to be submitted to arbitration; and

(ii) constitutes an arbitration agreement; and

(c) subsection (2) does not apply in relation to the arbitration agreement.

(5) If the third party enforces the arbitration agreement under section 4, then, as regards the dispute for which the arbitration agreement is enforced, the third party is treated as a party to the arbitration agreement for the purposes of the Arbitration Ordinance (Cap. 609).

(6) The third party is so treated immediately before the third party exercises the right to enforce the arbitration agreement under section 4.” (Emphasis added.)

16.  To avail oneself the benefit of the Ordinance, it is necessary to show that:

(1)  The claim falls within either sections 4(1)(a) or 4(1)(b), both of which are qualified by sections 4(2) and 4(4). If it is a case of section 4(1)(b), it is further qualified by section 4(3);

(2)  Once the above can be satisfied, sections 12(1) and 12(2) would prima facie come into play, subject to the qualification of section 12(3).

17.  Specifically in relation to the phrase “the term purports to confer a benefit on the third party” in section 4(1)(b) of the Ordinance, it was held in Dolphin Maritime & Aviation Services Ltd v Sveriges Angfartygs Assurans Forening [2010] 1 All ER (Comm) 473 at §74 that:

“A contract does not purport to confer a benefit on a third party simply because the position of that third party will be improved if the contract is performed. The reference in the section to the term purporting to ‘confer’ a benefit seems to me to connote that the language used by the parties shows that one of the purposes of their bargain (rather than one of its incidental effects if performed) was to benefit the third party.” (Emphasis added.)

18.  Similarly, in San Evans Maritime Inc v Aigaion Insurance Co Sa [2014] 2 Lloyd’s Rep 265, the Court, after citing Dolphin Maritime, held that it is the purpose of the parties that matters (but not whether the position of the third party can be improved):

“40. I consider that the purpose of the parties, in particular of the Lloyd’s syndicates, in agreeing clause 7 was to protect those syndicates from any possible liability to Aigaion in circumstances where, as they knew, the Aigaion policy contained the Follow Clause. Their purpose was not to confer a benefit on Aigaion, though clause 7 might improve the position of Aigaion if, contrary to my view, the Follow Clause operated by way of agency.” (Emphasis added.)

19.  Following Dolphin Maritime, the Singaporean case of Columbia Asia Healthcare Sdn Bhd v Hong Hin Kit Edward And Another [2014] 3 SLR 87 at §§276-279 held that to show that the term purports to confer a benefit on the third party, it is necessary to show that the third party was an intended beneficiary (rather than incidental beneficiary).

20.  The test is not whether any benefit has been conferred upon a third party, but whether the term purports to confer a benefit.

21.  In the present case, the Plaintiff relies upon the following clauses of the Service Agreement:

Clause	Content
Second paragraph of preamble	本公司特別提醒用戶認真閱讀本協議的全部條款，特別是其中免除或者限制本公司責任的條款（該等條款通常含有“不負任何責任＂、“無義務＂、“不保證＂等詞彙）、限制用戶權利的條款（該等條款通常含有“不得＂、“不應”、“無權”等詞彙）、法律適用和爭議解決條款，這些條款應在香港法律所允許的範圍內最大程度地適用。您點擊同意、接受或下一步，或您註冊、使用本公司遊戲服務均視為您已閱讀並接受本協議的全部內容。此後您不得以未閱讀／未同意本協議內容或類似理由提出任何形式的抗辯。
三、遊戲帳號 (“Clause 3”)	1、您在使用遊戲服務之前須使用真實身份資訊註冊郵箱帳號或本公司認可的其他協力廠商帳號（如Google 、Facebook 等帳號）註冊遊戲帳號（以下簡稱“用戶帳號”）。 2、用戶同意，您所提供的個人註冊資料將作為本公司認定用戶與遊戲帳號的關聯性以及識別用戶身份的唯一依據。用戶有義務妥善保管用戶帳號及密碼，並合理地使用其帳號及密碼，本公司將採取合理的技術和管理措施保證用戶的帳號及密碼安全。任何一方未盡上述義務導致帳號、密碼被盜、遺失等情形而給您或他人的權利造成損害的，應當承擔由此產生的法律責任。
六、用戶行為規範 (“Clause 6”)	2、您在使用本公司遊戲服務過程中，不得從事以下不正當遊戲行為： (1)發佈、傳播非法言論或不當資訊，包括但不限在遊戲中發佈不雅言論、垃圾廣告資訊、 宣傳外掛、病毒、代練、線下交易等資訊； … (9) 在遊戲中，涉及違反香港及本公司遊戲發行地所屬國家或地區法律、違背社會道德文明準則的言語或行為，包括但不限於宣傳或參與賭博、宣傳邪教、暴力等行為； (10) 其他在行業內被廣泛認可的不當行為。 3、您在使用本公司遊戲服務過程中違反用戶行為規範從事上述行為之一的，本公司有權視情節嚴重程度，依據本協議及相關遊戲規則的規定，對您採取以下規定的一種或多種處理措施： … (2) 禁言，關閉違規玩家全部或部分的聊天頻道，使違規玩家無法在遊戲中發言、與其他玩家聊天； … (10) 承擔法律責任，違規玩家的不當行為對他人或者本公司造成損害的，追究違規玩家相應的民事、行政或刑事責任； …
十、法律適用 (“Clause 10”)	本協議的訂立、履行、解釋及爭議的解決均適用香港法律（不包括衝突法）。凡因本服務條款引起的或與本服務條款有關的任何爭議，應提交中國國際經濟貿易仲裁委員會香港仲裁中心，按照申請仲裁時該會現行有效的仲裁規則進行仲裁。仲裁裁決是終局的，對雙方均有約束力。仲裁地應為香港。此外，若本服務條款有任何部份無效，亦不影響其他部份之效力。

22.  First, I agree that section 4(1)(a) is inapplicable, because there is no provision expressly stating that a third party may enforce the Service Agreement.

23.  Secondly, I also agree with Mr Siu that going through the clauses relied upon by the Plaintiff, none of them purport to confer any benefit on the Plaintiff. As such, section 4(1)(b) is inapplicable.

24.  Thirdly, I am of the view that on a proper construction, those terms are not intended to be enforceable by the third party. For instance, Clause 6(2) sets out the conducts prohibited by Qookka, i.e. Clauses 6(2)(1)-(10). Clause 6(3) stipulates that if there are serious breaches of Clause 6(2), Qookka has the right to impose the measures in Clause 6(3)(1)-(11). Most of the measures including “禁言”, “限制遊戲”, “封號” could only have been imposed by Qookka as the game developer. Clause 6(3) is intended to benefit Qookka as a game developer.

25.  Fourthly, I agree that on proper construction of the Service Agreement, a third party is not subject to the arbitration agreement. In Clause 10, it is stated that the arbitration agreement was confined to “雙方”, i.e. the gamer and Qookka.

26.  For the above reasons, I am of the view that there is no arbitration agreement between the Plaintiff and the Defendant. This should be dispositive of the Plaintiff’s Stay Summons.

27.  The Defendant further submitted that by making the interim injunction application, the Plaintiff is not entitled to apply for a stay under section 20 of the Arbitration Ordinance, Cap. 609.

28.  Section 20 of the Arbitration Ordinance modelled on the UNCITRAL Model Law, and is almost identical to the Article 8 of the First Schedule to the New Zealand Arbitration Act 1996. In the New Zealand case of Property People Ltd v Housing New Zealand Ltd (1999) 14 PRNZ 66, the plaintiff applied for an application for interim injunction, and the defendant filed the notice of opposition to the interim injunction application and affidavits in support (§§5-6). After the plaintiff’s interim injunction application was dismissed, the defendant applied for stay application (§§7, 12). In rejecting the defendant’s stay application, one of the reasons pronounced by the Court was that the notice of opposition to the interim injunction application and affidavits in support constitute a statement on the substance of the dispute (§24).

29.  Further, in Anderson Switchboards and Electronics Ltd v Schneider Electrical (NZ) Ltd (M1215 IM00, 16 January 2001), one of the grounds relied upon by the applicant is that the dispute is the subject of an arbitration agreement, and should be referred to arbitration (§10). The Court rejected the argument and held that the applicant’s affidavit in support of the application constituted the first statement on the substance of the dispute (§10(b)). The Court clarified §24 of Property People and held that an application for stay was out of time once a person has made a statement on the substance of the dispute, regardless of whether it is made before any hearing of interim injunction.

30.  In Fisken and Associates v Frew (CP33/01, 24 August 2001), the plaintiff applied for an injunction (§9). The defendant filed a notice of opposition and affidavits (§9). After the injunction application was declined, the defendant applied for stay of proceedings (§11). The Court rejected the application for stay, and held that:

“37. With respect, however, to that issue, the issue of timing per se must be irrelevant to whether art 8(1) applies or not. The issue under art 8(1) is whether the Defendants submitted their first statement on the substance of the dispute in the notice of opposition and affidavits filed in opposition to the injunction. The inquiry must be as to the substance and content of the response to determine whether the Defendants addressed the substance of the dispute in the documents filed for the injunction hearing. Time pressures could only be relevant in a practical sense if a defendant responded to an application for injunction on a Pickwick basis without filing papers, or otherwise responded to an injunction orally or on a very pro forma notice of opposition without any substantive affidavits because of the time constraints. In such a situation it may be that the Court would find the defendant could not properly be said to have submitted a statement on the substance of the dispute. Apart from that practical situation, however, I do not see how it can be suggested timing is properly a consideration as to whether art 8(1) applies or not.

…

41. Both named First Defendants filed substantive affidavits in opposition to the application for interim injunction. Those affidavits dealt with the merits of the claim and in particular whether they had taken confidential information belonging to the Plaintiff. The First Defendants at that time denied (in Mrs Frew's affidavit) that the contracts still applied.

…

47. Despite Mr Wright's submissions to the contrary, like Salmon J in The Property People Ltd (supra) case, I find in this case that the notice of opposition to the interim injunction application and the affidavits filed in support of it constituted a statement by the First Defendants on the substance of the dispute. They are therefore now unable to rely on art 8(1).” (Emphasis added.)

31.  In Pathak v Tourism Transport Ltd (CP 641 SW/01, 20 August 2002), the Court considered the position where the stay application was made by a plaintiff who had applied for injunction. The Court at §47 said:

“In my view, a critical distinction is to be drawn between a party who initiates curial interim injunction proceedings in anticipation or in aid of arbitral proceedings and a Plaintiff who does not. If proceedings are issued to seek an interim injunction without reference to the arbitration agreement, I am of the view that The Property People Ltd and the cases which follow apply to prevent a Plaintiff who issues such proceedings from subsequently seeking a stay. Similarly, a Defendant who opposes interim relief and fails to seek a stay (or protest jurisdiction) in respect of the substantive dispute will also be prevented from seeking a stay: see The Property People at para [24].” (Emphasis added.)

32.  The rationale is that Article 9 of the First Schedule of the Arbitration Act 1999 (equivalent of section 21 of the Arbitration Ordinance), which expressly stated that an interim measure application is not “incompatible with an arbitration agreement”. On the facts of that case, the interim injunction was commenced by the plaintiff in aid of arbitral proceedings. Nonetheless, the Court still rejected the plaintiff’s application because of the plaintiff’s failure to make an application to stay immediately after the interim measure application.

33.  I agree that the Plaintiff is no longer entitled to seek relief under section 20 of the Arbitration Ordinance after “submitting his first statement on the substance of the dispute”. The application for the interim injunction together with the supporting affirmations which addressed the merits of the Plaintiff’s claims were not made in aid of an arbitration.

REQUEST FOR ELECTRONIC RECORDS

34.  I also dismiss the application for discovery of electronic records. First, there is no explanation as to how the requested documents relate to a matter in issue in the action; and are necessary for disposing fairly of the cause or matter or for saving costs.

35.  Mr Siu for the Defendant is correct that the application for discovery for the electronic records is problematic in the present case as the pleadings have not been closed. In fact, not even the Statement of Claim was filed. The Plaintiff has failed to put forward any “exceptional circumstances” required by the law to justify a discovery request before the close of pleadings.

36.  Finally, I also agree that paragraph 4 of the Stay Summons should be dismissed once paragraph 3 is dismissed. It constitutes an application for injunctive relief through the backdoor of Order 24 rule 7.

DISPOSITION

37.  For all the reasons stated above, this Court dismissed the Stay Summons.

38.  As far as costs are concerned, I am of the view that this case merits an order for costs on an indemnity basis. There is no justification for the Plaintiff to choose to commence both a High Court action and an arbitration when the Plaintiff cannot even show that there was an agreement between the Defendant and Qookka, let alone one involving the Plaintiff. Indeed, the Plaintiff accepted that her contention that there was an agreement between the Defendant and Qookka is “subject to discovery”. (See §1 of the Plaintiff’s Skeleton)

39.  Madam Justice Mimmie Chan had already observed and invited the Plaintiff to consider whether it would like to withdraw the present action.

40.  As this application for stay is futile and abusive on many bases, I am of the view that there is no reason why the Defendant should not be compensated by a costs order on an indemnity basis.