林煥琴女士 v. 美聯集團有限公司

DCCJ 2114/2010

IN THE DISTRICT COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

CIVIL ACTION NO. 2114 OF 2010

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DECISION

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Background

1.  On 18 June 2010, the Plaintiff, then acting in person, issued a Writ with Statement of Claim endorsed, seeking from the Defendant the deposit money she paid and legal costs incurred in the purchase a property at Park Island (“the Property”), resulting from misrepresentation and deceit in sum of HK$192,326.

2.  Subsequent to the service of the same, Acknowledgement of Service contesting the Action was filed by Defendant on 6 July 2010.

3.  The Defendant took out a Summons on the 2 August 2011 (“the 1^st Summons”) seeking to strike out the Statement of Claim in this action pursuant to Order 18 rule 19(1) of the Rules of the District Court and/or inherent jurisdiction of the Court on the grounds that:-

a.   the Statement of Claim discloses no reasonable cause of action;

b.   Statement of Claim is scandalous, frivolous and/or vexatious;

c.    the Statement of Claim is an abuse of process of Court .

4.  They also seeked to dismiss this action with costs.

5.  On 23 November 2011, Plaintiff through her solicitors issued a Summons seeking to amend the Statement of Claim (“the 2^nd Summons”).

6.  Plaintiff objected to the terms of the 1^st Summons whereas Defendant objected to the terms of the 2^nd Summons. Both Summonses were heard together.

7.  Both agreed at the hearing that this Court should deal with the 1^st Summons in light of the proposed amendments to the Statement of Claim.

Defendant’s case

8.  In support of the 1^st Summons, Defendant relied on Affirmation filed on 2 August 2011 of Choi Siu Ching (“Choi”) assistant financial controller of 美聯置業(行政管理)有限公司, a subsidiary of Defendant.

9.  Choi says that both Mr. Yip Cho Sing (“Yip”) and Mr. Kurt Tse (“Tse”) are not agents of Defendant but merely agents of Midland Realty International Limited(“MR”) as Defendant was not engaged in any estate agency business and they had no dealings with the Plaintiff.

10.  Mr. Keith Lam (“Mr. Lam”), counsel for the Defendant agrees that the Court should only strike out a claim where it is plain and obvious that the claim is unsustainable.

11.  He argues that in the Statement of Claim (as it now stands), the Plaintiff is silent as to the legal basis upon which the Defendant is sued. The Statement of Claim is wholly inadequate and lacking. One could only become aware of the basis of Plaintiff’s claim from her Affirmation filed in opposition of the 1^st Summons on 19 October 2011.

12.  Mr. Lam says on reading the proposed Amended Statement of Claim and the Affirmation of the Plaintiff, the Plaintiff appears to bring the present action against the Defendant (instead of MR) by reasons that:-

a. Defendant and MR belong to the same group, and the whole group advertises the “group identity” of the holding company and its subsidiaries.

b. Breaches of duties/regulations by the estate agents of MR were handled by Defendant.

c.  Prior to the commencement of the action (but subsequent to the alleged misrepresentation), Defendant had never denied their involvement in the case.

13.  Mr. Lam submits that in paragraph 3 and 4 of the proposed Amended Statement of Claim the Plaintiff had admitted that both Yip and Tse had identified themselves as staff of MR. He said, therefore that the Plaintiff said in paragraph 13 of the proposed Amended Statement of Claim that MR should be liable for their conduct.

14.  Further, as referred to by Choi in her Affirmation, the Plaintiff had signed 2 authorization letters in favour of MR both dated 12 June 2004 in relation to the purchase of the Property. This confirms that the Plaintiff knew exactly that she was dealing with MR, not the Defendant.

15.  Mr. Lam therefore says that though the Chinese name of the Defendant which is identical with that of MR appeared on the name card of Tse, it did not mislead the Plaintiff into treating Yip and Tse as agents of the Defendant.

16.  It is clear from the proposed Amended Statement of Claim that Plaintiff knew at the material times that the Defendant was the holding company of MR and that the alleged deceit and misrepresentation, came from MR, not the Defendant.

17.  Mr. Lam says that although Plaintiff in the proposed Statement of Claim stated that the Defendant had emphasized “group identity”, Plaintiff did not elaborate as to why therefore the Defendant should be liable for the acts of MR and/or its agents.

18.  He said though MR and the Defendant are related companies, they are different legal persons and it matters not that they always conduct promotion on “group identity” or the Defendant dealt with complaints against the subsidiary company. Mr. Lam cited the well known case of Salomon v Salomon & Co Ltd [1897] AC 22.

19.  Further, Mr. Lam submits that the reply letter of the 1 August 2007 (issued in answer to the complaint letter of the Plaintiff to the Defendant dated 27 June 2007 via the office of legislative councillor Mr. Albert Ho (“Mr. Ho”)) though bearing letter head of the Defendant, was in fact signed and sent by a branch manager of MR, not the Defendant.

20.  Mr. Lam says further that the handling of complaints and correspondence were all events subsequent to the alleged misrepresentation in question and cannot alter the position of who was the principal of Yip and Tse at the time of the alleged misrepresentation. He also pointed out that the reply letter on 1 August 2007 was merely an offer by MR to waiver estate agency commission for future transaction. There is no admission of liability.

21.  Mr. Lam also submits that it was not pleaded by the Plaintiff, even in the proposed Amended Statement of Claim how Yip and/or Tse did hold out as agents for the Plaintiff as they had clearly identified themselves as staff of MR. It was not therefore submitted that it was not open for the Plaintiff to advance argument on “ostensible agents”.

22.  He says plainly the Plaintiff at all times knew the MR was the subsidiary of the Defendant and that she was dealing with MR, not the Defendant.

23.  He invites this Court to ignore argument by the Plaintiff in relation to internet search results of the Defendant on the webpage made subsequent to the incident or annual reports of the Defendant as it was not the pleaded case of the Plaintiff or even her evidence in her Affirmation filed in opposition of the 1^st Summons that she relied on these information when she entered into the Provisional Sale and Purchase Agreement.

24.  Mr. Lam referred to Bowstead and Reynolds on Agency ( 19^th edition, 2010) Chapter 2-047 where it is said that in order to bind “the principal” to an act not authorized, the act need be done purportedly in the name or on behalf of another. Here, the alleged misrepresentation by Yip/Tse were made as staff of MR and further the Plaintiff did know that she was dealing with staff of MR.

25.  As for whether there was estoppel in agency situation, Mr. Lam also referred this Court to Chapter 2-101 of Bowstead. Mr. Lam argues that the Plaintiff did not plead in either the Statement of Claim or the proposed Amended Statement of Claim that she was induced to make a detrimental change in position because the transaction she entered into was believed to be on account of another.

26.  Mr. Lam submits that clearly no agency arose between Defendant and MR in the present case.

27.  Mr. Lam contends that in this case, Plaintiff had sued the wrong party as Yip and Tse acted on behalf of MR and therefore any claims by Plaintiff should be directed against MR and not the Defendant.

Plaintiff’s case

28.  In opposition to the 1^st Summons, the Plaintiff had on 19 October 2011 filed and served an Affirmation. The same disclosed the Plaintiff’s claim arose as a result of the her being misled into entering a Provisional Sale and Purchase Agreement to purchase the Property as a result of certain misrepresentation/deceit by Yip and/or Tse both claiming to be estate agents ofMR.

29.  Plaintiff said contrary to what she told, she could not secure a mortgage from the banks to complete the purchase of the Property. As a result, the deposit she paid was forfeited and legal costs were incurred. She now claims from the Defendant recovery of such sums.

30.  She admitted that she knew at all material times that Yip and Tse were employees of MR and that MR was the Defendant’s subsidiary.

31.  Plaintiff said in her Affirmation that to her knowledge, as the Defendant and MR belong to the same group and the Defendant had in their promotion always stressed the group as a whole, she opined that when the staff of MR defaulted, she could seek redress from the Defendant.

32.  She said also that prior to the issue of the present proceedings (but subsequent to the incident), the Defendant did not dispute their involvement.

33.  Plaintiff also said that she had, on 27 June 2010 (i.e. shortly after the issue of the Writ), through the office of her present solicitor, Mr. Albert Ho, a legislative councillor, lodged a written complaint to the Defendant and that subsequently on 30 July 2010, a Mr. Chan Chi Sang, the manager of Tuen Mun branch of MR replied to such complaint, using the letter paper bearing the name of the Defendant.

34.  Mr. Ho in Court, as solicitor for the Plaintiff, admits that the Statement of Claim as it stands is lacking in particulars but he says that proposed amended Statement of Claim solved this problem.

35.  He stressed that the Defendant had at the material time held out MR (and/or its employees) as its agent, because:-

a.   The business card of the Tse contained the Chinese name of the Defendant , identical with that of MR and the stock no. 1200 which belongs to the Defendant on the Hong Kong Stock Exchange;

b.   Any internet search or inquiry about MR was automatically directed to Midland Holdings Group of Companies, i.e. the same home page;

c.    The Defendant handled the complaint directly by offering a settlement proposal in its letter dated 1^st August 2007.

36.  Mr. Ho says that Yip and Tse and/or its employer MR, were therefore agent of the Defendant. He refers to Agency in Halsbury’s Laws of Hong Kong, Vol. 1(2), 2003 Reissue, where paragraph 15.015 provides:-

“Elements of agency by estoppels

        Agency by estoppel arises when one person (the ‘principal’) has made a representation¹ to another person (the ‘third party’) that someone is his agent, with the intention and with the result of inducing the third party on the faith of such representation to enter into transactions to his detriment: the principal is estopped as against the third party from denying the agency². The doctrine³ applies equally to cases where the ostensible agent has no actual authority⁴ and to cases where the ostensible agent acts in excess of his actual authority.”

37.  The Plaintiff submits that Yip and Tse are, in the circumstances, ostensible agents of the Defendant.

38.  In relation to the “ostensible agent” argument, the Plaintiff admitted in the proposed Amended Statement of Claim that both Yip and Tse had identified themselves as employees of MR and that MR should be vicariously liable for their misrepresentation.

39.  The Plaintiff pleaded in paragraph 15 of the proposed Amended Statement of Claim that “the Defendant assumed the responsibilities of its subsidiary and offered a settlement proposed”.

40.  Plaintiff further pleaded in paragraph 16 and 17 of the proposed Amended Statement of Claim that further at all material times, the Defendant had emphasized the group identity of itself and its subsidiaries to the world. Defendant’s identity was shown on the business card of Tse by its stock number listed in the Hong Kong Stock Exchange. Access to the corporate information of MR on its website homepage would automatically be directed to the Defendant’s website.

41.  Mr. Ho says that in the premises, the Plaintiff is entitled to compensation from the Defendant which is and should be held liable for the wrongdoing of its fully owned subsidiary MR acting as its agents and as a member of the Midland Group of companies.

Conclusion

42.  The Statement of Claim endorsed on the Writ of Summons reads:-

“1. 索償有關購買「珀麗灣第三期23座32樓G室」之誤導及詐騙買賣時, 本人所支付的樓宇買賣按金及律師費用合共HK$192,326.00;

2.  本案相關律師費及訟費和利息。”

43.  This Court agrees totally with the observation by Mr. Lam that the Statement of Claim, as it now stands is wholly inadequate, fundamentally lacking and does not disclose any reasonable cause of action.

44.  Order 18 rule 19(2) of the Rules of the District Court reads:-

“No evidence shall be admissible on an application under paragraph (1)(a)”

45.  Accordingly, in relation to Defendant’s application under “no reasonable cause of action” limb, the Plaintiff could not seek support from her own Affirmation to explain her claim lodged against the Defendant.

46.  This Court agrees with the Defendant that in the circumstances of this case that there is no doubt in mind of the Plaintiff at the time that she was dealing with MR, which is known to her to be a subsidiary of the Defendant, not the Defendant.

47.  I agree that the agency argument of the Plaintiff must fail for reasons as submitted by Mr. Lam.

48.  In fact, the proposed Amended Statement of Claim did not plead how the agency between the Defendant and MR arose.

49.  The mere fact that the Defendant’s Chinese name (which happens to be identical with that of MR) appears also on the name card of Tse (together with the name of MR) does not assist the Plaintiff. The business card merely shows that MR and the Defendant are in the same group. The Plaintiff frankly admitted that Yip and Tse had identified themselves as employees of MR. The Plaintiff knew exactly that she was dealing with MR, not the Defendant. This was further supported by her authorization letters in favour of MR, not the Defendant.

50.  In paragraph 13 of the proposed Statement of Claim, the Plaintiff clearly admitted Yip and Tse as employees of MR.

51.  The fact that the Defendant had been emphasizing the group identity of itself and its subsidiaries to the world does not take away its separate corporate identity.

52.  This Court could not see how agency could arise in circumstances where the Plaintiff knew exactly that she was dealing with MR. Further, where is the representation by the Defendant that MR was his agent? The name card, as said, obviously did not suffice.

53.  Any inference that MR was the agent of the Defendant would be rebutted by the holding out by Yip and Tse as well as the authorization letters.

54.  Further, where is the detrimental reliance?

55.  It is also not the pleaded case of the Plaintiff that she relied on the corporate information of MR in its website homepage before she entered into the Provisional Sale and Purchase Agreement in question. These searches were done 7 years after the incident.

56.  I now come to the reply letter dated 1 August 2007 relied on by the Plaintiff as saying that the Defendant had assumed liability for MR. The same was signed by a Mr. Ivan Chan Chi Sang, manager of Tuen Mun West Rail Siu Hong Branch of MR, not the Defendant although he had used letter paper with letter head of the Defendant. The contents of this letter merely says that in order to honour the pledge “Client is First”, they (MR) are willing, in response to the allegation that their staff did not assist the Plaintiff in securing a mortgage, to waive all estate agency fee payable should Plaintiff patronize  the same branch within one year. There is no admission of liability by MR, let alone the Defendant. The same appeared to be a gesture of goodwill.

57.  Further, the manner that the Defendant handled the complaint raised by the Plaintiff was also, as said by Mr. Lam, subsequent to the event and had no bearing in the agency issue. In any event, the reply letter was not from the Defendant.

58.  Hong Kong Civil Procedure 2012 Edition, Vol. 1 P. 416 Order 18/9/6 sets out:-

“No reasonable cause of action or defence - A reasonable cause of action means a cause of action with some chance of success when only the allegations in the pleading are considered. (per Lord Pearson in Drummond-Jackson v. British Medical Association [1970] 1 W. L. R. 688, CA). So long as the statement of claim or the particulars (Davey v. Bentinck [1893] 1 Q. B. 185) disclose some cause of action, or raise some question fit to be decided by a judge or jury, the mere fact that the case is weak, and not likely to succeed, is no ground for striking it out. (Moore v. Lawson (1915) 31 T. L. R. 418, CA; Wenlock v. Moloney [1965] 1 W. L. R. 1238; Brilliant Star Investment Ltd v. NZI International Acceptances Ltd [1989] 1 H. K. C. 375; Karex (H. K.) Ltd v. Fortune Talent Development Ltd [1999] 3 H. K. L. R. D. 397; [1999] 4 H. K. C. 203); Hong Kong Niiroku Ltd & Another v. Kyokuto Securities (Asia) Ltd & Others, unreported, HCA No. 4122 of 2000, March 18, 2002, [2002]H. K. E. C. 376.”

59.  This Court does not find in the present case any question fit to be decided by a judge.

60.  Furthermore, at P. 417, Order 18/9/8 sets out:-

“Frivolous or vexatious - The object of the rule is to stop cases whichought not to be launched – cases which are obviously frivolous or vexatious, or obviously unsustainable’ (per Lindley L.J. in Att.-Gen. ofDuchy of Lancaster v. L. & N.W. Ry Co. [1892] 3 Ch. 274 at 277). See also Day v. William Hill (Park Lane)Ltd [1949] 1 K. B. 632; Law v. Dearnley [1950] 1 All E. R. 124, and in Kellaway v. Bury (1892) 66 L. T. 602; Bean v. Flower (1895) 73 L. T. 371.

The expression “frivolous or vexatious” includes proceedings which are an abuse of the process (see E. T. Marler Ltd v. Robertson [1947] I. C. R. 72, cited with approval in Ashmore v. British Coal Corp. [1990] 2 Q. B. 338). A proceeding is frivolous when it is not capable of reasoned argument, without foundation or where it cannot be possibly succeeded.”

61.  In the circumstances of this case, this Court finds the Plaintiff’s case obviously unsustainable. In my view, Plaintiff’s present action is hopeless and frivolous.  The case of the Plaintiff simply could not succeed.

62.  Even if this Court granted leave to the Plaintiff to amend Statement of Claim as prayed for in the 2^nd Summons, the Plaintiff’s case is still not arguable.

63.  Accordingly, the 2^nd Summons is dismissed; the Statement of Claim is struck out and the Action is dismissed.

Costs

64.  I also make an order nisi that the costs of this Action (including those of these 2 Summonses) be to the Defendant, with certificate for counsel, the same is summarily assessed at HK$37,857.4.