CHIU KEI LEUNG v. CHUI DEON YAU HAN AND ANOTHER

DCCJ 5510/2018

[2023] HKDC 134

IN THE DISTRICT COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

CIVIL ACTION NO 5510 OF 2018

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

BETWEEN

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

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

DECISION

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

1.   Introduction

1.1  By a summons dated 28 November 2022 (“Summons”), the plaintiff applies for leave to discontinue the present action. The timing of the issuance of the Summons is slightly unusual, as it was issued after the close of viva voce evidence which was given at the trial commenced on 21 November and after directions were made on 23 November 2022 for the lodging of written closing submissions.

1.2  By the Summons, as a condition for the court granting leave to discontinue the present action, the plaintiff offered an undertaking that the he would not commence any fresh action against the defendants in reliance on the same or substantially same facts as had been pleaded in this action (“Undertaking”). The plaintiff further offered to pay to the defendants the costs of this action on a party and party basis with a certificate of one counsel.

1.3  Upon the issuance of the Summons, I acceded to the plaintiff’s request to dispense with the lodging of written closing submissions and directed the parties to instead lodge skeleton arguments in respect of the Summons. The hearing on the Summons took place on 19 December 2022, which was originally fixed for closing submissions. Mr Leon Ho (who was not the trial counsel) appeared for the plaintiff and the defendants were, as in the trial, represented by Mr Benjamin Yu SC leading Ms Queenie Lau.

1.4  Whilst the defendants naturally did not oppose the plaintiff “dropping” the action and paying them the costs of the action, they disagreed with the terms set out in the Summons.

(1) First, Mr Yu says that given the lateness of the Summons in the present case which involves very serious allegations of fabrication, and the fact that the plaintiff’s claim is now demonstrably unsustainable, a more appropriate order is for the court to strike out the claim and dismiss the action.

(2) Secondly, on the issue of costs, the defendants contend that costs should be taxed on an indemnity basis with a certificate for two counsel.

1.5  After the defendants lodged their written submissions on the Summons, the plaintiff in his Note of Reply conceded that costs should be taxed on an indemnity basis. Mr Ho nevertheless advanced the following propositions.

(1) First, in reliance, inter alia, on Pine Enterprises Ltd v Cyber Strategy Ltd & Anor [2009] HKEC 482, Mr Ho reasons that it is not open to the court to dismiss the action under RDC Order 21, rule 3. Related to the foregoing, Mr Ho, by reference to Bonita Co Ltd v Chark Yuk Ying t/a Belinda Chark & Co [2022] 5 HKC 387, submits that prima facie the court should not compel a claimant to litigate against its will. Therefore, where, as here, the plaintiff has offered the Undertaking as a condition to the court granting leave to discontinue the present action, Mr Ho says that it is difficult to see why the defendants should contend that the court should refuse to grant leave to the plaintiff to discontinue the claim and dismiss it on merits.

(2) Secondly, Mr Ho maintains that the present case only warrants a certificate for one counsel.

1.6  On the issue of whether the present case is apt for a certificate for two counsel, Mr Ho in the course of the hearing accepted that Mr Yu’s attendance at the trial was justified. In the course of oral submissions, Ms Lau (who argued the costs issue for the defendants) confirmed that Mr Yu was engaged by the defendants principally for the trial and had provided some advice incidental to that purpose. Viewed thus, the question appears to be a narrow one, namely whether the defendants were justified to engage both Mr Yu and Ms Lau for the trial, the latter having been involved in the present case since the pleadings stage.

2.   Background

2.1  In the light of the positions adopted by the parties at the hearing, it seems to me that the relevant background matters may be shortly stated.

2.2  In this action, the plaintiff’s causes of action are based on libel and malicious falsehood. The plaintiff is a practising solicitor in Hong Kong and was formerly a resident at The Harhourside, a luxurious residential estate (“Estate”) managed by the 2^nd defendant. The 1^st defendant was a property manager of the Estate.

2.3  At the material time, the plaintiff was one of the candidates running in the Tenth Owners Committee Election. On 16 March 2018, the 1^st defendant, in her capacity as a property manager of the Estate, issued a letter addressed to and marked to the attention of “All Candidates” of the Tenth Owners Committee Election (“Letter”) which included the following words (“Words”):

“… Recently, we are reported that suspected case of canvassing activities by candidates are conducted in the estate causing nuisance to residents. Kindly be shared that such act is not allowed in this Election according to the Terms and Regulations of The Tenth Owners Committee Election that signed by all candidates.” (emphasis added)

2.4  The plaintiff contended that the Words referred to him and were defamatory and false. Further, the plaintiff argued in opening that any reliance on qualified privilege by the defendants would have been defeated by malice. The plaintiff’s case was that where the underlined portion of the Words referred to a report (by a resident at the Estate), that report was fabricated. In terms of relief, the plaintiff sought, in addition to damages and an injunction, an apology order which the plaintiff accepted in opening as “controversial” as “no judicial officer in Hong Kong has ever made an order compelling a defamation defendant to apologize to his victim against his will.”

2.5  The plaintiff’s case on fabrication was not particularized in his pleadings and was not set out in the witness statements filed by himself and the witnesses in support of his case. The real nature of his case on fabrication only came to light when the plaintiff himself gave his oral evidence. In response, on Day 3 of the trial, the defendants applied and was allowed to make discovery of contemporaneous documents which flatly contradicted the plaintiff’s case which then led the plaintiff’s trial counsel to abandon the case on fabrication.

2.6  As the case on fabrication was a main plank of the plaintiff’s case, its abandonment had a significant impact on how the plaintiff would frame its remaining case in closing. I therefore directed the plaintiff to first lodge its written closing submissions which was to be followed by the defendants’. The plaintiff would have the last word by his reply submissions. As stated at §1.1 above, the plaintiff issued the Summons before he was due to lodge his first round of written submissions.

2.7  In arguing that indemnity costs are justified, Mr Yu in his written submissions pointed to the following factors: (1) serious allegations of fraud (fabrication) was made without a proper basis, (2) the plaintiff deliberately withheld the nature of his case on fabrication, (3) serious allegations of fraud was only withdrawn at a very late stage in the proceedings and (4) allegation of malice was made without any proper basis. As stated at §1.5 above, Mr Ho eventually conceded that an order for indemnity costs is appropriate in the present case. Mr Ho was also candid in accepting that the Summons was taken out because of the lack of merits in the plaintiff’s case. In such circumstances, I do not believe it was inapt for Mr Yu to have portrayed the plaintiff’s case as a “complete collapse”.

3.   Discontinuance or dismissal

3.1  RDC Order 21, rule 3(1) provides as follows:

“Except as provided by rule 2, a party may not discontinue an action (whether begun by writ or otherwise) or counter-claim, or withdraw any particular claim made by him therein, without the leave of the Court, and the Court hearing an application for the grant of such leave may order the action or counterclaim to be discontinued, or any particular claim made therein to be struck out, as against any or all of the parties against whom it is brought or made on such terms as to costs, the bringing of a subsequent action or otherwise as it thinks just.” (emphasis added)

3.2  In Pine, the defendants applied on the 17^th day of the trial to dismiss their own claim against the 2^nd third party. At §§167-168, DHCJ To said as follows:

“167 The application was not made under Order 21 rule 23 of the Rules of the High Court. Had it been made under that provision, I would have wide discretion in imposing terms including order as to costs and a term that no other action may be brought against Andrew Law. But despite the wide discretion, I do not consider dismissing the proceedings is one which is open to me. If the proceedings have been discontinued , the jurisdiction to pronounce an adjudication is taken away from me. If I wish to have the proceedings dismissed, I can only refuse the application for discontinuance and then dismiss the proceedings on their merits at the conclusion of the proceedings.

168 There are provisions under the Rules of the High Court for striking out an opponent’s pleading or dismissing the opponent’s action, but not dismissing one own’s action. But I think in the discharge of the court’s function of case management, I must have inherent jurisdiction to dismiss an action, whether at my own initiative of at the invitation of any party including the one who took out the proceedings, which has no chance of success and the continuation of which would achieve no purpose other than wasting costs.” (emphasis added)

3.3  As the defendants in Pine were unwilling to pay costs to the 2^nd third party on an indemnity basis, DHCJ To was of the view that the state of the evidence at the time when the application was made was such that it was premature for him to adjudicate on the scale of costs. He allowed the proceedings to proceed for the purpose of determining costs. At §§172 and 173, the learned Judge said:

“172 The Defendants having abandoned the third party proceedings against the 2^nd Third Party, the proceeding must be dismissed with costs… Their refusal to pay Andrew Law’s costs on indemnity basis and their face saving allegation made it necessary for Andrew Law to insist on continuing the litigation. Andrew Law is entitled to have his costs for the entire proceedings.

173 In the light of the further and better particulars given by the Defendants, the Defendants have no case against Andrew Law…Viewed in this light. Gary Ho had never believed and could hardly have any reason to believe Andrew Law was an associate of Edward Woo in making false representations to him, let alone his case against Edward Woo is also fabricated. This shows that the third party proceedings against Andrew Law is vexatious and an abuse of the process of the court. It is only proper that the Defendants shall pay Andrew Law’s costs to be taxed on indemnity basis…”

3.4  At Hong Kong Civil Procedure 2023 Note 21/5/12D, a reference is made to Pine. It states as follows:

“In [Pine] counsel for the Defendant (who took out a counterclaim against a third party) applied unsuccessfully to have the Defendant’s counterclaim action dismissed. The judge noted that under O.21 r.3, the court has power to discontinue an action at the request of the person who took out the action but not the power to dismiss the action. Note that the court now has power to make any order of its own motion under O.1B r.2.”

3.5  At Bonita §§32, B Chu J said as follows:

“As pointed out by Aldous J in [Albright & Wilson v SB Chemicals Ltd [1994] RPC 608], there were cases where leave to discontinue had been refused and judgment was given for the defendant and there were other cases where undertakings had been required which would prevent the plaintiff bring a fresh action in respect of the acts complained of. As said by Aldous J, those cases did not appear to him to establish any clear principle in that they were all decided upon their own facts. Aldous J thus believed that he should approach the matter from first principle and in particular he should consider what was just in all the circumstances, taking into account that he should not compel the plaintiff to litigate against its will and that the defendant should not be deprived of an advantage or in any way be prejudiced.” (emphasis added)

3.6  The difference between discontinuance and dismissal is explained in Re Sailport Pty Ltd [1990] 2 Qd R 395 at 396 as follows:

“The importance of the difference between discontinuing and dismissing the application rests with their consequences. If the application is discontinued, its discontinuance will not have the effect of a judgment on the merits. If, however, it is dismissed it may very well have such an effect.”

3.7  Relying on the material set out at §§3.2 to 3.6 above, Mr Ho submits that a discontinuance with the Undertaking and a dismissal have the same practical effect, in that it prevents the plaintiff from vexing the defendants with a revived claim based on the same subject matter. He therefore invites the court to grant leave to the plaintiff to discontinue the present action.

3.8  On the other hand, Mr Yu contends that the appropriate course would be for the court to dismiss the action. He argues that this may be achieved by two alternative routes.

(1) His primary position is that leave to discontinue should be refused.

(2) His alternative position is that under RDC Order 21, rule 3, the court has the power to strike out a claim with the consequential order of dismissing the action.: Mr Yu’s written submissions §4.

3.9  For both scenarios, he invites the court to take into account of the fact that the plaintiff only issued the Summons after all the evidence has been given in the trial and the court has had ample opportunity to conclude that there is a complete lack of merit in the plaintiff’s case.

3.10  Mr Yu relies on Discovision Associates v Disctronics (UK) Ltd [1999] FSR 196 in which Laddie J declined to exercise his discretion to allow discontinuance as he found that it was an exceptional case. His conclusion was based on the following factors (Discovision §§20-24):

(1) there were substantial grounds upon which the defendants have alleged in that case that the claims sought to be withdrawn were highly speculative and based upon no firm material whatsoever;

(2) the plaintiff in that case was unwilling to offer an undertaking in like terms of the Undertaking in the present case;

(3) the trial was then two months away and whether the claims sought to be withdrawn remained or not would not have a serious impact on the trial;

(4) it was preferable that the issue of indemnity costs be reserved to the trial judge.

3.11  I agree with Mr Yu’s primary position. Whilst it is true that, unlike Discovision, the plaintiff here has offered the Undertaking (the 2^nd factor above), the other three factors are all applicable to the present case.

(1) In terms of the first factor, as stated at §2.7 above, Mr Ho was candid in acknowledging the lack of merits in the plaintiff’s case and in conceding that costs should be paid on an indemnity basis.

(2) As regards the third factor, a substantial portion of the trial had already taken place.

(3) In relation to the fourth factor, not only am I tasked with dealing with the issue of costs, Mr Ho has now conceded that costs should be paid on an indemnity basis.

3.12  In my view, the present case has exceptional features which warrant the exercise of my discretion to refuse leave to the plaintiff to discontinue the present action.

(1) As is trite, there may be a number of reasons for the discontinuance of an action which may not be strictly related to merits. For example, an action may be discontinued because the parties have reached a settlement.

(2) The observation made in the preceding paragraph is made more acute in the present case as a substantial portion of the trial had already taken place. As stated at §2.5 above, the plaintiff opted to “roll the dice” on an unparticularized but serious allegation. The very serious allegation of fabrication was advanced against, inter alia, the 2^nd defendant which plays an important role in Hong Kong and is a listed company.

(3) That tactic failed. It is plain, and now accepted by Mr Ho, that there is no proper basis for the serious allegation to be made and it would be unreal to characterize the Summons as anything other than an abandonment of the plaintiff’s action. Whist I am prepared to accept Mr Ho’s submission that there is no practical difference between discontinuance (coupled with the Undertaking) and dismissal, it seems to me only right that the plaintiff’s unsustainable action should be dismissed on the merits: §§3.5 and 3.6 above. Had the Summons been taken out before the trial (or before it became obvious that plaintiff’s case is demonstrably unsustainable), I would have been more inclined to grant leave to discontinue.

3.13  Given my agreement with Mr Yu’s primary position, it is strictly unnecessary for me to deal with his alternative position.

3.14  Had it been necessary, I would also have been prepared to accept Mr Yu’s alternative position. It is plain that under RDC Order 21, rule 3, there is a power to strike out a particular claim on the application by the claimant to withdraw that particular claim. Whilst it is true that it is stated at Hong Kong Civil Procedure 2023 Note 21/5/1 that RDC Order 21, rules 2 to 5 draw a clear distinction between discontinuance and withdrawal, in that discontinuance involves the final termination of the whole action or counterclaim and withdrawal refers to the termination of a claim within an action or counterclaim, it seems to me in principle there is no reason why (and Mr Ho has not referred to any authority to the contrary), in the circumstances of the present case, the discontinuance of the plaintiff’s action cannot be treated as a withdrawal of each and every claim making up the whole action. It is therefore possible that each and every claim making up the whole action may be struck out.

3.15  As I understand Mr Yu, his submission is that upon the striking out of each and every claim making up the entire action, the court has the power to consequentially dismiss the action. I further do not understand Mr Yu that it is his position that the power to consequentially dismiss the action derives only from RDC Order 21, rule 3. As stated at Pine §168 (set out at §3.2 above), the court has an inherent jurisdiction to dismiss an action, whether at my own initiative of at the invitation of any party including the one who took out the proceedings. In the present case, the plaintiff had opted to refrain from making any closing submissions and to discontinue his claim following the close of evidence. As Mr Ho has acknowledged, the plaintiff’s decision was driven by his own acceptance on the lack of merits in its case. Had it been necessary, I would have exercised my discretion to dismiss the plaintiff’s action, following the striking out of each and every claim comprising the present action.

4.   Certificate for one or two counsel

4.1  I have considered that relevant considerations (non-exhaustively) set out at Xinyuan Trading Co Ltd v NPH Petrochemical Limited, HCA 18159 of 1998 and CACV 276 of 1998, 26 September 2000 §§24-26. As set out at §1.6 above, where, as here, the plaintiff accepts that the attendance of Mr Yu at the trial was justified, the real question is whether it was also justified for the defendants to instruct Ms Lau, who had been involved since the pleadings stage, to assist Mr Yu at the trial.

4.2  In my view, the answer should be answered in the affirmative. As set out at §§2.4 and 3.12 above, the question of relief is one which is not settled in Hong Kong and very serious allegations were levied against an entity in the position of the 2^nd defendant. The plaintiff’s claim is also document-heavy, as the plaintiff has chosen to build up his case on malice from events dating back all the way to March 2011, some seven years before the issuance of the Letter.

5.   Conclusion

5.1  For the reasons above, I dismiss the Summons (ie Mr Yu’s primary position). I further dismiss the plaintiff’s action against the defendants and order the plaintiff to pay to the defendants the costs of the action (including any costs reserved) on an indemnity basis with a certification for two counsel to be taxed if not agreed.

5.2  In respect of the costs of the Summons, there is no reason why costs should not follow the event. The plaintiff only conceded to pay costs on an indemnity basis after the defendants had lodged their written submissions. As one might expect, Mr Yu (as trial counsel) made detailed submissions on the plaintiff’s litigation conduct to justify an order for indemnity costs. On a nisi basis, I order the plaintiff to pay to the defendants the costs of and occasioned by the Summons with a certificate for two counsel to be taxed if not agreed.

5.3  I thank all counsel for their assistance.