SIU NAI YING AND ANOTHER v. OCTAGON WORKSHOP LTD AND OTHERS

HCA 375/2019

[2019] HKCFI 2952

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

ACTION NO 375 OF 2019

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BETWEEN

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DECISION

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Introduction

1.  By a summons filed on 21 June 2019 (“the Summons”), the 3^rd Defendant (“D3”) applied for an order striking out various parts of the Amended Statement of Claim (“the ASoC”) as against D3, on the ground that in so far as the claim of the Plaintiffs (“Ps”) against D3 was concerned, the ASoC allegedly (1) disclosed no reasonable cause of action against D3; (2) was frivolous and vexatious; and/or (3) was an abuse of process.

2.  I heard the Summons substantively on 5 November 2019 and reserved my decision.  Having considered everything, my decision is to (1) dismiss the Summons; and (2) order D3 to pay all costs of the Summons, including all costs reserved, summarily assessed by me with Certificate for Two Counsel at HKD 246,605, to Ps forthwith (“the Decision”).

3.  My reasons for the Decision are as follows.

Background Facts

4.  Ps were lawyers and they were married to each other.  They had a young daughter.  The 1^st Plaintiff (“P1”) was in private practice and worked for a solicitors’ firm.  The 2^nd Plaintiff (“P2”) worked in-house.  P2 also owned and ran a corporation called Ever Surplus Limited (“ESL”).

5.  ESL operated a restaurant at 21/F, 8 Observatory Road, Tsim Sha Tsui, Kowloon (“the Premises”).

6.  The 1^st Defendant (“D1”) was a local corporation which had on or about 9 November 2015 entered into a contract with ESL to carry out construction works at the Premises.  D3 was a registered shareholder and director of D1.

7.  Ps’ case was that on or about 14 December 2018, Ds directed a number of debt collectors (“the Debt Collectors”) to seek payment (“the Alleged Debt”) from Ps using inappropriate tactics, as a result of which Ps suffered loss, including pecuniary loss in the form of extra payments made towards a bodyguard/driver.  The main cause of action pleaded against Ds was the tort of “conspiracy to injure by unlawful means”.

8.  The unlawful means alleged to have been used by Ds included tortious acts of harassment and intimidation, carefully particularized by Ps in the ASoC in 38 crystal clear sub-paragraphs.

9.  Relying on the same particulars, Ps also pleaded an alternative case of Ds and each of them having committed tortious acts of harassment and intimidation themselves, as well as alternative cases of negligence and vicarious liability.

D3’s Submissions

10.  Mr Simon Westbrook SC and Mr Tommy Cheung, Counsel for D3, submit, inter alia, that this is a clear case for striking out, and there should be an order in terms of the Summons.  They submit Ps’ allegations against D3 were just “bare assertions”, and the material facts or particulars pleaded against D3 in the ASoC were insufficient.  According to them, Ps are plainly abusing the process of this Court in that Ps are persisting in their prosecution of claims against D3 personally, knowing full well they simply have no evidence D3 was in any way involved, and that their case against D3 is bound to fail.

Ps’ Submissions

11.  Mr Robert Whitehead SC and Ms Madeleine Booth, Counsel for Ps, submit, inter alia, that this case is “by no stretch of the imagination a plain and obvious case in which the Court should exercise its summary powers to strike out”, and the Summons should be dismissed.  They say there is nothing unarguably bad about the pleadings, nothing unsustainable about the claims made against D3, and it is “not impossible” for the claims against D3 to succeed.  They say the Summons is “a hopeless one”.

My View

12.  In gist, I agree with Ps’ submissions in their entirety.

13.  As the learned editors of HKCP 2020 had correctly observed in paragraph 18/19/4 of their work, in hearing a striking out application this Court must take all disputed facts in favour of the party sought to be struck out and rule on that basis.  A pleading should only be struck out if it would be literally impossible, not just improbable, for the pleaded case to succeed. One must be careful not to drive any plaintiff from the judgment seat unless the matter is beyond doubt.  Further, difficult questions of law should not be determined within striking out hearings.  The Court of Appeal, in their recent judgment in LYYC v CHL and CSMS [2019] HKCA 521 (paragraph 12), confirmed these principles as “well-established”.

14.  Applying these well-established principles and assuming, as I must in hearing the Summons, that D3 had, with the intent to injure Ps by unlawful means, conspired with others to commit the various tortious acts of harassment and intimidation carefully particularized in the ASoC in 38 sub-paragraphs, and Ps suffered direct pecuniary loss as a result thereof, Ps had plainly pleaded a good cause of action against D3.  The Summons is, with respect, misconceived.

15.  Furthermore, it is irrelevant in this striking out application that D3 denied all allegations against him on affirmation.  The truth or falsity of D3’s various assertions should be decided by the trial judge in a proper trial. This Court does not resolve disputed facts in a striking out hearing.  As stated above, as a matter of law, within a striking out hearing, disputed facts are to be taken in favour of the party sought to be struck out.

16.  Mr Westbrook, Leading Counsel for D3, draws my attention to the case of Salomon v A Salomon & Co Limited [1897] AC 22 where the House of Lords (see the speech of Lord Macnaghten at 51) famously held that a corporation is in law a separate legal entity which is neither the agent nor the trustee of its shareholders, and describes that as “the starting point”.  I agree that is the starting point, but it is precisely because D3 and D1 were separate persons in law that they could be separate participants in the same conspiracy in the manner as pleaded by Ps in the ASoC.  A natural person cannot in law conspire with himself, but he can conspire with a corporation of which he is a shareholder and/or director, or with another natural person.  I do appreciate different considerations may apply in criminal proceedings (see, eg, R v McDonnell [1966] 1 QB 233), but these proceedings are civil in nature.  Since Salomon is still good law, there is simply nothing wrong with Ps suggesting D3 conspired with, inter alios, D1.

17.  In any case, the Irish and English Courts have had the chance to consider the proposition, and separately held that for the purposes of the tort of conspiracy to injure, a natural person could be held to be conspiring with a corporation of which he was a director or member.  As a matter of principle, I agree with their holding.  See, eg, Taylor v Smyth [1991] IR 142, or Barclay Pharmaceuticals Limited v Waypharm LP [2012] EWHC 306 (Comm) (paragraphs 220 to 229, per Gloster J).

18.  Of much greater importance is the UK Supreme Court’s recent judgment in JSC BTA Bank v Ablyazov (No 14) [2018] UKSC 19 [2018] 2 WLR 1125, where Lord Sumption and Lord Lloyd-Jones JJSC jointly said the following at their paragraph 9: -

“…The critical point is that the tort of conspiracy is not simply a particular form of joint tortfeasance. In the first place, once it is established that a conspiracy has caused loss, it is actionable as a distinct tort. Secondly, it is clear that it is not a form of secondary liability, but a primary liability.”

19.  The dictum above is of importance since D3 appeared to have misunderstood the current situation as one of Ps trying to hold D3 liable as a secondary tortfeasor for something done by D1, when the truth is that in so far as the plea of “conspiracy to injure by unlawful means” is concerned, Ps are suing D3 as a primary tortfeasor, rendering company law principles largely irrelevant for our present purposes.

20.  I further agree with Ps’ submissions that their alternative pleas of negligence and vicarious liability are also prima facie viable.  It would be quite inappropriate to strike out Ps’ averments to the effect that D3 owed Ps independent common law duties of care which were breached, as there will in any case be a full blown trial of other causes of action involving the same or substantially the same facts, and all questions of law can be much better answered after the trial judge definitively established what the facts are at the full blown trial.  See, eg, the Court of Appeal’s observations in Shenzhen Futaihong Precision Industry Co Ltd v BYD Co Ltd [2012] 3 HKLRD 736 (paragraphs 16 to 18 per Tang V-P) and Sunny Tadjudin v Bank of America National Association [2010] 3 HKLRD 417 (paragraph 7 per Stone J).

21.  Moreover, as the Court of Final Appeal had said in Luen Hing Fat Coating & Finishing Factory v Waan Chuen Ming (2011) 14 HKCFAR 14 (at paragraphs 30 & 37, per Bokhary PJ): -

“… Ultimately it is necessary to stand back and take a holistic view of foreseeability, proximity and the need to be satisfied that it would be fair, just and reasonable to impose a duty of care… No common law landmark, not even one as respected and worthy of respect as Lord Atkin’s ‘neighbour’ statement, can be expected to stand alone and sufficient on its own forever. That is one of the clearest lessons that legal history teaches. While having due regard to the importance of predictability and continuity, the courts will, as they must, develop the common law to provide such fresh or adapted solutions as may be needed to cope with new problems as and when they emerge…”

22.  The above being the law, it is in my view unrealistic for D3 to suggest, at a striking out hearing, that Ps’ case against D3 on negligence or vicarious liability must necessarily fail.

23.  There is no substance in D3’s complaint of lack of particulars either.

24.  First of all, Order 18 rule 7 of the RHC prohibits litigants from pleading evidence. It specifically says (so far as material): -

“…every pleading must contain, and contain only, a statement in a summary form of the material facts... but not the evidence by which those facts are to be proved, and the statement must be as brief as the nature of the case admits.”

25.  It has been settled law since at least 1838 when Lord Dinman of the English Court of Appeal decided Williams v Wilcox (1838) 8 A & E 331, that “it is an elementary rule in pleading that when a state of facts is relied on, it is enough to allege it simply without setting out the subordinate facts which are the means of proving it or the evidence sustaining the allegation”. That “elementary rule” had been applied most consistently in Hong Kong, including by Zimmern J in Shun Lin Weaving Factory v Eva Siu Cheng Yee Wah [1980] HKC 605 at 613-F.

26.  Having examined the ASoC carefully, I agree with Ps that Ps had pleaded more than enough particulars, and that Ps were not obliged to plead the evidence they intended to adduce to prove their case.

27.  More importantly, even if I were wrong on the sufficiency of particulars, it is trite that where the real complaint is lack of particulars, the party entitled to further and better particulars should simply have asked for particulars under Order 18 rule 12, and should not have attempted striking out. See, eg, HKCP 2020, paragraph 18/19/5 and my previous reasons for decision in Mehul Girishbhai Tanna v Avijit Nayak [2018] HKCFI 2683.

28.  Finally, having carefully examined all affidavit evidence, and Counsel’s most able submissions, I am not satisfied Ps had been pursuing their claims against D3 in bad faith, with ulterior motive, or in a frivolous or vexatious manner. Ps’ claims against D3 was plainly not without basis. Ps’ allegation of abuse of process has not been made out.

29.  In my view, one must be realistic about these matters. In this day and age, whether in criminal or civil courts, an allegation of conspiracy is usually proved by circumstantial evidence, or the drawing of inferences. See, eg, the pertinent remark of DHCJ William Wong SC in Skyline Credit Ltd v Leung Hing Chung [2019] HKCFI 169 at paragraph 36. Since D3 was a shareholder and director of D1, and he must have had some interest in the operation of D1, it is entirely possible for the trial judge to infer, at the end of a full trial, after examining all evidence (circumstantial and oral), that D3 must have been a co-conspirator in this matter. I am satisfied Ps do have sufficient basis to prosecute their case against D3, and they should be allowed to bring that to trial.

30.  Since the deponents of the affirmations filed for the Summons may well be called as factual witnesses in the future trial, I would refrain from commenting on their affidavit evidence in an elaborate manner.

Costs

31.  Costs should follow the event. Ps were the clear winner and D3 was the clear loser. The costs of the Summons should thus be paid by D3 to Ps.

32.  On Certificate for Two Counsel, in my view it was reasonable, necessary and proper for each side of the Summons to engage Two Counsel, given the importance and potential consequences of the Summons, and the legal complexity of the arguments put forward.  Both sides engaged Two Counsel, and all Counsel had been extremely helpful to this Court.

33.  On the quantum of costs, Ps claim HKD 248,605. Pursuant to paragraphs 13 & 14 of Practice Direction 14.3, I examined each item in Ps’ Statement of Costs, and also the final figure. In my view, only Item C4 needs to be adjusted. All other sums claimed are most reasonable.

34.  Taking a broad-brush approach in assessing quantum of costs, I consider a total figure of HKD 246,605 to be fair and reasonable.

Final Remarks

35.  I do thank all Counsel for their most able assistance.