MEHUL GIRISHBHAI TANNA v. AVIJIT NAYAK

HCA 1335 / 2018

[2018] HKCFI 2683

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

ACTION NO 1335 OF 2018

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REASONS FOR DECISION

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Introduction

1.  By a summons filed on 9 July 2018 (“the Summons”), the Defendant (“D”) applied for an order striking out the Statement of Claim herein (“the SoC”) under Order 18 rule 19 of the Rules of the High Court (“RHC”) on the purported grounds that the SoC allegedly (1) disclosed no reasonable cause of action; and (2) was otherwise an abuse of the process of this Court.

2.  I heard the Summons substantively on 4 December 2018, after which I (1) dismissed the Summons; (2) ordered D to pay the costs of the Summons, summarily assessed by me with Certificate for Counsel at HKD 97,192, to the Plaintiff (“P”) forthwith; and (3) made an unless order that unless D files and serves his Defence at or before 4:00 pm on 18 December 2018, P be at liberty to enter judgment against D (“the Decision”).

3.  My reasons for the Decision are as set out below.

Submissions of D

4.  In support of the Summons, Mr Sarath Dissanayake, Solicitor for D, submitted, inter alia, that: -

(1)  The SoC made “a bare allegation” that there was an oral agreement between P and D to share profits, but it did not disclose any fact to show that that was in fact the case; and

(2)  The alleged oral agreement, if it existed at all, would in any case be wholly unenforceable by P against D as being contrary to Section 3 of the Conveyancing and Property Ordinance (“Cap 219”).

Submissions of P

5.  In opposition of the Summons, Ms Amanda W Y Lee, Counsel for P, submitted, inter alia, that: -

(1)  P only had to plead allegations of material facts and P had done so in the SoC – it was wrong in law for D to suggest that P had to go further and plead evidence in support of his allegations, or to show in the SoC itself that the allegations must be true;

(2)  Striking out should only be attempted in the most plain and obvious cases and this case came nowhere near the requisite threshold; and

(3)  The alleged oral agreement was not about interests in land and as such, Section 3 of Cap 219 simply had no application whatsoever.

My View

6.  In gist, I agreed with the submissions of P and disagreed with the submissions of D.

7.  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.”

8.  Indeed, it has been settled law since at least 1838 when Lord Dinman CJ of the English Court of Appeal decided the case of 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”, and that had been applied 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, ever since.

9.  In my judgment, D’s submissions in support of the Summons amounted to requiring P to prove his case within the SoC itself by pleading evidence in breach of settled law and Order 18 rule 7 of the RHC.  In my view, D’s submissions were bad in law.  I agreed with P that P had pleaded more than enough particulars for a claim of this nature, and that P was not obliged to plead his intended evidence.  At the very least, having read the SoC, it could not be said that this was a plain and obvious case for striking out.  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, instead of making an application for a striking out order under Order 18 rule 19: HKCP 2019, Volume 1, page 493, para 18/19/5.

10.  As to Section 3 of Cap 219, I agreed with P that it simply had no application to the SoC.  Section 3 of Cap 219 was only concerned with “the sale or other disposition of land” and it read as follows: -

“Land contracts to be in writing

(1) Subject to section 6(2), no action shall be brought upon any contract for the sale or other disposition of land unless the agreement upon which such action is brought, or some memorandum or note thereof, is in writing and signed by the party to be charged or by some other person lawfully authorized by him for that purpose.

(2) This section applies to contracts or other dispositions whenever made and does not affect the law relating to part performance or sales by the court.”

11.  The oral agreement as pleaded in the SoC was only concerned with the distribution of cash and as such it plainly fell outside of Section 3 of Cap 219 and did not have to be in writing to be enforceable.

12.  By reason of the above, all complaints of D in relation to the SoC were misconceived and the Summons must be dismissed.

13.  As to consequential directions, D had not filed a Defence and must be given time to do so.  In my judgment, giving D 14 days from 4 December 2018 to file a Defence should be more than sufficient, given that that was the time extension D had asked for in the Summons, and P’s case in the SoC was simple. D and his lawyers had been sitting on the SoC for close to 5 months (from at least 9 July 2018 when D took out the Summons).  An unless order was appropriate.  Mr Sarath Dissanayake, Solicitor for D, most sensibly agreed to an unless order being made against D.  Assuming this action cannot be settled amicably, both parties should try to bring this action to trial the soonest possible.  Needless to say, further delays would be highly undesirable.

Costs

14.  There was no reason why costs should not follow the event in this matter. P was the clear winner and D was the clear loser.  The costs of the Summons should be paid by D to P.

15.  On the question of Certificate for Counsel, in my judgment it was reasonable, necessary and proper for P to engage Counsel to argue the Summons substantively, given the potential consequence of an order being made in terms of the Summons, and the involvement of at least one point of law.

16.  On the quantum of costs, P claimed HKD 97,192 inclusive of Counsel Fees.  Having examined P’s Statement of Costs carefully, I came to the view that all items claimed were reasonable.  I allowed P’s claim in full.

Final Remarks

17.  As Nazareth VP had said in Beijing Television v Brightec Ltd [1999] 2 HKC 665 at 674E, striking out is a drastic remedy.  Practitioners are reminded that unless a claim is plainly unarguable, attempting striking out would be counterproductive as it would slow down the progress of the case and bring about adverse costs consequences.  Borrowing the famous words of Tang VP (as Tang NPJ then was) in the well-known defamation case of Wong Wing Ho v Chong Lai Wah & Anor [2008] 2 HKC 546, even when a defendant considered the case of a plaintiff to be weak or extremely weak, “the temptation to hasten its demise should be resisted”.

18.  I thank both advocates for their most able assistance.