MUST RICH CONSTRUCTION LTD v. CHAN KA LOK AND OTHERS

DCCJ 6619/2020

[2022] HKDC 23

IN THE DISTRICT COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

CIVIL ACTION NO. 6619 OF 2020

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DECISION

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1.  By a summons dated 18 March 2021 (“the Summons”), the 1^st, the 2^nd and the 3^rd defendants (“D1”, “D2”, and “D3”, collectively “Ds”)  apply for an order that:-

(1)  The plaintiff (“P”)’s claim against Ds herein struck out and the action against Ds be dismissed on the grounds that P’s claim against them is frivolous and vexatious and/or is otherwise an abuse of process of the court; and

(2)  the registration of the writ of summons herein in the Land Registry against the lots in respect of which Ds are the owners (“the Subject Lots”)  be vacated.

2.  On 16 December 2021, P’s solicitors confirmed in their letter that they would not oppose the application for an order as set out in [1(2)] above.  Accordingly, the only issue before me is the striking-out application made by Ds.

Background

3.  Ds are the registered owners of the Subject Lots.

4.  P commenced these proceedings on 10 December 2020 against Ds and the 4^th defendant (“Sky Unique”).

5.  P’s claim against Ds is based upon a written contract dated 13 May 2019 (“the Written Contract”).  P says that Ds have wrongfully breached the Written Contract and are therefore liable to P.  P says that Ds are parties to the Written Contract.  In [6] of the Statement of Claim, P pleaded:-

“6. Acting on behalf of the [Ds], [Sky Unique] entered into a written contract for the Project with [P] dated 13^th May 2019 …, pursuant to which [P] was engaged by [Ds and Sky Unique] to carry out the construction and decorations works for the 3 residential buildings under [the Written Contract].”

6.  On the face of the Written Contract, the parties to the contract are P and Sky Unique.  There is nothing in the Written Contract saying that Ds are parties to the contract.

7.  It is P’s pleaded case that:-

(1)  P is the sub-contractor of a construction project (“the Project”)  involving constructing 3 residential buildings (“the 3 Buildings”)  on the Subject Lots.[1]

(2)  Sky Unique is and was at all material times the agent and/or representative of Ds in the Project.[2]

8.  Ds deny that they are parties to the Written Contract.

The principles

9.  The relevant principles are well established and not in dispute.[3]

(1)  Pleadings should be struck out only in clear and obvious cases.  Disputed facts are to be taken in favour of the party sought to be struck out.  The claim must be obviously unsustainable, the pleadings unarguably bad and it must be impossible, not just improbable, for the claim to succeed before the court will strike it out.

(2)  A proceeding is “frivolous” when it is not capable of reasoned argument, without foundation or where it cannot possibly succeed.  A proceeding is “vexatious” when it is oppressive and/or lacks bona fides.

(3)  Where a litigant brings a claim knowing that there is no substance in it or that it is bound to fail, or if the claim is on its face so manifestly misconceived that it can have no prospect of success, it may be deemed as frivolous and an abuse of the process of the court.

(4)  It is an abuse of the process of the court to start a case without solid foundation hoping that something will turn up in the course of the proceedings.

Discussion

10.  In my view, it is plain and obvious that P’s claim against Ds ought to be struck out, as the claim is clearly frivolous and vexatious.  I am also of the view that the claim is an abuse of process of the court.

11.  First, as said in [6] above, there is nothing in the Written Contract indicating that Ds are parties to the contract.  As per the Written Contract, it is plain and obvious that the parties to the contract are P and Sky Unique. Mr Lawrence Cheung for P submits that Sky Unqiue is described as “業主” in the Written Contract, which should mean owner of the Subject Lots. Hence, there is indication that Sky Unique in fact entered into the Written Contract on behalf of Ds. With respect, I am unable to accept these submissions. The plain meaning of the term “業主” is “owner”. The Written Contract is a construction contract, and the subject matter therein is the Project. Reading in context, the term “業主” in the Written Contract should mean the owner of the Project.

12.  Second, as to the alleged agency relation put forward by P, i.e. Sky Unique was the agent of Ds and entered into the Written Contract on behalf of Ds, there is nothing pleaded by P in support of this alleged agency relationship.  It has not been pleaded that there has been any written or oral agency agreement between Ds and Sky Unique at any time.  It has also not been pleaded that the alleged agency relationship can be inferred by reference to some circumstances.

13.  P has tried to rely upon the matters in HCA 432/2021 to support the alleged agency relationship.  HCA 432/2021 was commenced by Tsui Ping Sum (“Tsui”, a director of Sky Unique)  and Sky Unique against Ds and some other defendants on 19 March 2021.  P says that in that action, Tsui and Sky Unique are claiming against Ds, among other reliefs, outstanding construction and decoration fees of the 3 Buildings.  P further says that from the pleaded case of Tsui and Sky Unique in that action, it is clear that Sky Unique entered into the Written Contract on behalf of Ds pursuant to certain powers of attorney.

14.  With respect, as submitted by Mr Stony Chan for Ds, there is nothing in the pleaded case of Tsui and Sky Unique in HCA 432/2021 suggesting that Sky Unique entered into the Written Contract on behalf of Ds.  In fact, Tsui and Sky Unique’s case in that action is that they have entered into some investment agreements (not the Written Contract)  with D1 to D3 and one CS Chan, whereby one Tsui Ping Chi and one Wong Po Shan are agents in relation to those investment agreements.

15.  P has tried to make good its claim against Ds by relying upon the matters pleaded in HCA 432/2021, which is an action commenced by others after P starting this action.  I agree with Mr Chan that this fact itself shows that P has started a case without solid foundation, hoping that something will turn up in the course of the proceedings.  This is an abuse of the process of the court.

16.  Mr Cheung submits that in respect of the alleged agency relationship, disputed facts should be taken in favour of P in the striking-out application.  Further, if Ds are not clear of the details of the alleged agency relationship, Ds should seek particulars from P and should not be entitled to have the striking-out order sought in the Summons. With respect, these arguments could not save P’s case.

(1)  P bears the burden to plead the material facts in support of the alleged agency relationship.  P has not discharged this burden.  Up to now, P is still unable to spell out the factual basis of the alleged agency relationship.  Without knowing the relevant material facts in support of P’s claim against Ds, I cannot assume anything in favour of P in a vacuum.

(2)  Counsel is unable to tell me if I grant leave to P and allow P to give particulars of the alleged agency relationship, what particulars P would be able to offer.  That being the case, allowing P’s claim to continue to hang over Ds’ heads would be a harassment to Ds.

17.  In my judgment, Ds’ striking-out application should be allowed.

Deposition

18.  I order in terms of [1] and [2] of the Summons.

19.  Costs should follow the event. Since I am of the view that P’s claim against Ds is an abuse of the process of the court, I would award indemnity costs to Ds.  I order that costs of these proceedings, including costs of the Summons, be to Ds and be assessed on indemnity basis.  There be a certificate for counsel.  Those costs are summarily assessed at HK$120,000.

20.  I thank counsel for the assistance rendered to the court.