SUCCESS LANE DEVELOPMENT LTD v. IFC DEVELOPMENT (SUITE) LTD AS AGENT FOR IFC DEVELOPMENT LTD

DCCJ 3838/2023

[2024] HKDC 1369

IN THE DISTRICT COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

CIVIL ACTION NO 3838 OF 2023

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DECISION

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Introduction

1.  On 15 April 2024, Master Vincent Kee of the District Court struck out the Plaintiff’s claims in this action on the grounds that no reasonable cause of action has been disclosed.  The learned Master also ordered costs against the Plaintiff, which was summarily assessed on an indemnity basis.

2.  On 25 April 2024, the Plaintiff took out a notice of appeal seeking to overturn Master Kee’s order.  After the said notice of appeal was taken out, the Plaintiff, through solicitors, further took out an inter partes summons dated 9 August 2024 seeking to amend its statement of claim.

3.  This is the substantive hearing in respect of the Plaintiff’s appeal against Master Kee’s order and its application to amend the statement of claim.

4.  Mr Chris Fong (counsel for the Plaintiff)  and Mr Douglas Clark (solicitors advocate for the Defendant)  have lodged written submissions (which I have considered).

5.  However, shortly before the present hearing, Madame Yung Mei Chun (also known as Jessie Yung)[1] filed a notice to act in person on the Plaintiff’s behalf.  In the circumstances, at the present hearing Madame Yung appears for the Plaintiff acting in person and the Defendant is represented by Mr Clark.

Material Background

6.  IFC Development Limited is the owner of the hotel known as Four Seasons Place situated at 8 Finance Street Center (hereinafter the “Four Seasons Hotel”).

7.  The Defendant is a subsidiary of IFC Development Limited.

8.  The Plaintiff is a company incorporated in Hong Kong.

9.  On 8 March 2022 and 7 September 2022, the Plaintiff acting in the capacity as the agent of IFC Development Limited entered into two long staying agreements (the “Long Staying Agreements”)  with the Plaintiff.

10.  In short, the Long Staying Agreements provided that subject to the terms and conditions therein as well as the terms and conditions of the service guide (the “Service Guide”), the three registered guests nominated by the Plaintiff (hereinafter collectively the “Registered Guests”)  were authorized to use and occupy room 2228 of the Four Seasons Hotel during the period from 10 March 2022 to 9 September 2023.

11.  As stated in clause 1 of the Long Staying Agreements, the 3 Registered Guests nominated by the Plaintiff are (i)  Mr Cheung Moon Hoi (who is also known as Mr Jeff Cheung); (ii)  Madame Jessie Yung; and (iii)  Mr Cheung Yuk Ming.

12.  The evidence shows that Madame Jessie Yung is Mr Jeff Cheung’s wife, and Mr Cheung Yuk Ming is their son.

13.  According to the public records maintained with the Companies Registry[2], Mr Jeff Cheung was a director of the Plaintiff at the material times, and the sole shareholder of the Plaintiff was Mr Cheung Kwong Hoi.

14.  In the initial statement of claim and the draft amended statement of claim, the Plaintiff complains that the 3 Registered Guests received sub-standard services at the Four Season Hotel and that they were subject to discriminatory treatment[3]. The alleged complaints can be summarized as follows:

(1)  The Registered Guests and a friend invited by them was asked to leave the Sky Lounge on 26 August 2022 (the “Sky Lounge Complaint”)[4].

(2)  When the Registered Guests used a meeting room on the 59^th floor on 25 November 2022, the hot water supply at the Sky Lounge was out of order, and they were only provided with an electric water kettle (the “No Hot Water Complaint”)[5].

(3)  The Defendant allegedly expedited the billing in respect of the use of the meeting room on the 59^th floor on 25 November 2022 (the “Expedited Billing Complaint”)[6].

(4)  On 14 January 2023, the Defendant accused the Registered Guests of leaving rubbish outside of room 2228 thereby causing obstruction.  Meanwhile, the Defendant did not take action against another occupant who left service trolleys in the corridor (the “Rubbish/Obstruction Complaint”)[7].

(5)  The employees of the Defendant were allegedly discriminatory and manipulative when they negotiated the terms of the Long Staying Agreements.  Some other occupants obtained leasing terms that were more favourable than those offered to the Plaintiff (the “Negotiation Complaint”)[8].

15.  In light of the aforesaid Complaints, the Plaintiff says that the Defendant failed to provide “an ideal environment” to the Plaintiff and the Registered Guests, and this constituted breach of:

(1)  the terms and provisions of the Service Guide (which was incorporated pursuant to clause 14 of the Long Staying Agreements); and

(2)  the implied contractual terms in the agreements between the parties[9].

16.  The Plaintiff also says that it has “suffered loss and damage” by reason of “the diminished enjoyment of the amenities and facilities” at the Four Seasons Hotel[10].

17.  In these premises, the Plaintiff seeks damages against the Defendant (to be assessed)[11].

Legal Principles on Striking Out and Amending Pleadings

18.  The legal principles on striking out are trite:-

(1)  A proceeding is frivolous when it is not capable of reasoned argument or cannot possibly succeed.  A proceeding is vexatious when it is oppressive or in lack of bona fides.  The court may strike out a claim that is incapable of reasoned argument, without foundation or cannot possibly succeed.  However, the power to strike-out shall only be exercised in plain and obvious cases: see Oh Jae-hoon Eugene v Richdale [2005] 2 HKLRD 285, para 15 (per Ma CJHC, as Ma CJ then was); Yifung Properties Ltd & Ors v Manchester Securities Corp & Ors (HCA 1341 & 1359/2014, 19 October 2015), para 12 (per Queeny Au-Yung J); and Hong Kong Civil Procedure (2024)  at para 18/19/8.

(2)  If on a careful reading of the statement of claim, it can be seen that there is no cause of action or the claim will obviously not succeed, then it will be struck out despite the apparent complexity: see Hong Kong Civil Procedure (2024)  at para 18/19/4; Cheung Chui Sou Ying v Personal Repersentatives of Cheung Yuk Luen [1981] HKLR 585 at 588H.

(3)  There should be no trial on affidavit and disputed facts are taken in favour of the party sought to be struck out.  However, the court should remain vigilant to ensure that its process are not abused by prosecution of hopeless claims: see The New China Hong Kong Group Ltd & Anor v Kwai Kai Kenneth & Ors (HCA 519/2010, 11 February 2011)  at para 40 (per Fok JA, as Fok PJ then was).

19.  As regards the legal principles on amending pleadings, it is trite that all amendments that ventilate the real question in controversy between the parties should be allowed. However, no leave to amend would granted if it is readily apparent that the proposed amendment is bound to fail: see Natamon Protpakorn v Citibank NA [2009] 1 HKLRD 455 at para 25 (per Cheung JA); Re Playmates Investments Ltd [1996] 4 HKC 577 at 582E-H (per Le Pichon J (as Le Pichon JA then was); Hong Kong Civil Procedure (2024)  at para 20/8/6.

Analysis

20.  It is trite that an appeal from a master’s decision to a judge in chambers is a de novo hearing, and the judge will deal with the matter in question as if it came before him or her for the first time: see Hong Kong Civil Procedure (2024)  at para 58/1/2.

21.  For the following reasons, I am of the view that the Plaintiff has failed to disclose a reasonable cause of action, and the proposed amendments are incapable of salvaging the Plaintiff’s claims, which are unarguably bad and doomed to failure.

22.  First of all:-

(1)  A company is an artificial legal creation, and it has no feelings.  As pointed out by DHCJ Herbert Au-Yeung (as Herbert Au-Yeung J then was)  in Sir Elly Kadoorie & Sons v Bradley [2023] 3 HKLRD 587 at para 66, a company cannot suffer worry, emotional distress or annoyance.

(2)  In the premises, even if the Plaintiff’s Complaints were substantiated, the Plaintiff could not have suffered “diminished enjoyment” as alleged. This suggestion makes no sense and is untenable.  The persons who occupied room 2228 and used the facilities and services at the Four Seasons Hotel were the 3 Registered Guests, not the Plaintiff.

(3)  In the circumstances, the Plaintiff has been unable to make any plea and/or put forward any evidence to explain how it could have suffered “diminished enjoyment” and/or any other kind of loss and damage.

(4)  In my view, the Plaintiff’s claims are not only unarguably bad and doomed to failure, but also abusive.  Whilst the three Registered Guests were discontent with the Defendant’s services, it is plain that the Plaintiff has not suffered any loss and damage.

(5)  Knowing the difficulty faced by the Plaintiff, Madame Yung suggests that the Plaintiff is, at least, entitled to seek nominal damages as well as a declaration against the Defendant.  I am not persuaded by Madame Yung’s contention.  As pointed out by Mr Clark, if the Plaintiff were only entitled to nominal damages, it should have brought its claim in the Small Claim Tribunal, not the District Court (which hears civil disputes of value over HK$75,000 but less than HK$3million).  Moreover, I do not see any legitimate reason why the Plaintiff’s Complaints should be entertained in the circumstances of the present case.  By now, the Long Staying Agreements have expired already.  There is no suggestion that the adjudication by the court would serve the purpose of clarifying the position in respect of the parties’ rights and obligations.  In this connection, it is trite that the court does not adjudicate academic controversies in the vacuum that serves no useful purpose and does not affect the parties’ interest: see eg Russian Commercial and Industrial Bank v British Bank for Foreign Trade Ltd [1921] 2 AC 438, at 448 (per Lord Dunedin); and Koo Ming Kown v Rev Mr Mok Tong Ting [2018] HKCFI 967 at paras 19-20 (per DHCJ To).

23.  Second, there is no basis for the Plaintiff to contend that there is an express contractual term requiring the Defendant to provide the Registered Guests with an “ideal environment”.  This contention is misconceived and unarguable:

(1)  I accept that clause 14 of the Long Staying Agreements referred to the Service Guide.

(2)  However, as pointed out by Mr Clark, section 1 of Service Guide (on which the Plaintiff’s claims in this action are premised)  was merely a welcome message from the management of the Four Seasons.  It read as follows:-

“Section 1- Welcome Message

It is a great pleasure to extend the warmest welcome on your move-in to the Four Seasons Place Hong Kong (the “Suite Hotel”), a development designed with great care, and managed by the staff of the Four Seasons Place Hong Kong in order to provide you with an ideal environment during your stay in Hong Kong.”

(3)  As a matter of construction, the aforesaid welcome message was not a contractual term at all. It was merely a greeting from the management of the Four Seasons Hotel out of courtesy. It did not impose, and could not have imposed, any contractual obligation on the part of the Defendant.

(4)  Indeed, the notion of “ideal environment” was hopelessly vague and incapable of being defined or ascertained. The parties could not have agreed that the welcome message should constitute part of the contractual relationships between the parties. This could not be the objective intention of the parties.

24.  Third, none of the express terms or provisions in the Long Staying Agreements and the Service Guide (which was referred to in clause 14 of the Long Staying Agreements)  support the Plaintiff’s Complaints:-

(1)  Insofar as the Complaints in relation to the use of the Sky Lounge and the Hot Water are concerned, none of the express terms or provisions in the Long Staying Agreements and/or the Service Guide suggest that the Defendant was contractually obliged to open the Sky Lounge and/or offer hot water through the facilities there on a 24-hour basis.  Common sense dictates that there were times when hotel facilities were tentatively closed for cleaning or maintaining purposes.  The Plaintiff’s Complaints were plainly unreasonable.

(2)  As regards the Rubbish/Obstruction Complaint, none of the express terms or provisions in the Long Staying Agreements and/or the Service Guide suggest that the Defendant might not remind guests to be considerate and avoid causing nuisance to others.  In this connection, the Service Guide expressly provides that hotel guests:-

(a)  are expected to conduct themselves in a reasonable and courteous manner with full consideration for the wellbeing and comfort of other occupiers, visitors and employee; and

(b)  may not cause nuisance, annoyance, damage or disturbance to others.

(3)  As regards the Expedited Billing Complaint, the Service Guide provides that in the absence of other billing arrangements, a credit card should be provided upon checking-in, and the cardholder should authorize the Defendant to settle all incidental charges using the credit card on a monthly basis without further approval at the end of each calendar month.  It appears that the purpose of relevant term of the Service Guide was to impose an obligation on the occupiers to provide a credit card and to agree that the credit card be charged at the end of each calendar month.  I am not of the view that the term relied on by the Plaintiff imposes obligations on the part of the Defendant at all.  In any event, based on the pleas in the amended statement of claim[12], I cannot see how it can be said that the Defendant breached the terms of the Service Guide.  The Plaintiff only pleaded that the staff at the front desk billed the use of the meeting on the 59^th floor on 27 November 2022, as opposed to 30 November 2022 (which was the last day of the month).  It was not pleaded that the Defendant actually debited the sum in respect of the service charge before 30 November 2022.  More fundamentally, there is no plea suggesting that the credit card in question was provided by the Plaintiff (as opposed to the Registered Guests).  As such, even on the Plaintiff’s pleas, it cannot be shown that the Plaintiff had suffered any loss or damage as a result of the alleged pre-mature billing.

(4)  Lastly, as regards the Negotiation Complaint, none of the express terms or provisions in the Long Staying Agreements and/or the Service Guide provides that the Defendant was contractually obliged to offer the most favourable deal to the Plaintiff.  It would be surprising if this kind of contractual term finds its way to the parties’ agreement.

(5)  Anyhow, the Plaintiff’s claim in respect of the Negotiation Complaint is bad in law.  As Kwan VP pointed out in Lucy Michaels v Harbour Grand Hong Kong [2020] HKCA 705 at paras 80 to 81 (citing Formation and Variation of Contracts by John Cartwright (2^nd ed)  at paras 2-10 and 2-11):-

“80. … There is no general duty not to cause loss by breaking off negotiations and no general duty of care to respect the other party’s interest during the negotiations. Even the deliberate breaking off of negotiations, in the knowledge that the other party will suffer loss, is not tortious.”

“81. … there is no general duty of disclosure between negotiating parties….”

25.  Fourth, I reject the Plaintiff’s contention that there was an implied contractual term requiring the Defendant to provide an “ideal environment” and/or “quality services”[13]:-

(1)  In Kensland Realty Limited v Whale View Investment Ltd (2021)  4 HKCFAR 381 at para 23[14], Bokhary PJ (applying BP Refinery (Westerpoint)  Pty Ltd v Shire of Hastings (1978)  52 ALJR 20 at p 26)pointed out in order for a term to be implied:-

“(1)  it must be reasonable and equitable; (2)  it must be necessary to give business efficacy to the contract, so that no term will be implied if the contract is effective without it; (3)  it must be so obvious that it goes without saying; (4)  it must be capable of clear expression; and (5)  it must not contradict any express terms.”

(2)  As pointed out, the notion of “ideal environment” was hopelessly vague and incapable of being defined or ascertained.  This observation also applies to the notion of “quality services”.  These notions are entirely subjective.  I am not satisfied it is arguable that the implied term alleged by the Plaintiff is capable of clear expression and reasonable.

(3)  Furthermore, I am not satisfied it is arguable that the alleged implied term is necessary to give business efficacy.  It is not seriously in dispute that the Four Seasons Hotel is reputable.  However, I cannot see how it can be said that without the implied term alleged by the Plaintiff, the Long Staying Agreements would be ineffective and/or inoperative.

Conclusion and Order

26.  For the above reasons, it is plain and obvious that the Plaintiff’s claims in this action are without foundation, wholly unarguable and liable to be dismissed.  It appears to me that those who are in control of the Plaintiff are simply seeking to make a mountain out of a molehill when the Plaintiff has not suffered any loss or damage and the Plaintiff’s interest has not been affected at all.

27.  I conclude that:-

(1)  The Plaintiff has failed to disclose any reasonable cause of action;

(2)  The Plaintiff’s claims in this action are frivolous and vexatious; and

(3)  The Plaintiff’s claims in this action constitute an abuse of the Court’s process.

28.  I accordingly dismiss the Plaintiff’s appeal against Master Vincent Kee’s order dated 15 April 2024.

29.  Since the proposed amendments to the statement of claim are incapable of salvaging the Plaintiff’s case at all, I also dismiss the Plaintiff’s inter partes summons dated 9 August 2024.

30.  Towards the end of the hearing, Madame Yung proposed that the Plaintiff be given another opportunity to put forward another draft amended statement of claim. For the following reasons, I am of the view that this is not the appropriate course to take, and I reject Madame Yung’s proposal:

(1)  Madame Yung is unable to explain what the proposed amendments are about. In light of the analysis set out hereinabove, I fail to see how the Plaintiff’s claims can be salvaged by further amendments.

(2)  By taking out the inter partes summons dated 9^th August 2024, the Plaintiff had already attempted to salvage its claims in the present action. Such attempt was futile. Bearing in mind that the present action was commenced almost one year ago on 5 September 2023, I am of the view that it would be undesirable to leave the present action overhanging the head of the Defendant any longer. This would be unfair to the Defendant.

Costs

31.  Madame Yung also contends that Master Kee should not have ordered indemnity costs against the Plaintiff and conducted gross sum assessment when the Plaintiff did not attend the hearing on 15 April 2024[15].

32.  It is trite that a “costs-only” appeal against master’s decision is not a hearing de novo, and the judge will not intervene the master’s exercise of discretion on costs unless it can be shown that the costs order made by the master was demonstrably unreasonable or that he erred in law: see Yancrown Limited v Chan Wai Piu [2022] HKCFI 1555 at para 20 (per B Chu J); Paul Y ITC Construction Limited v Kin Shin Company Limited, (HCA 2220/1998, 2 December 1998)  at para 20 (per Sakhrani J); and Yip Kin Wah v Yip Fung To (HCA 2067/2011, 29 August 2012)  at para 20 (per Queeny Au-Yeung J).

33.  In my view, Master Kee’s exercise of discretion was appropriate, and I cannot discern any error on his part.  Since Master Kee took the view that the Plaintiff’s case was unarguable at all, he was entitled to take the view that the Plaintiff was liable for indemnity costs.  He was also entitled to exercise his discretion to conduct gross-sum assessment, such that legal costs and judicial resources could be saved. 

34.  In the premises, I will not disturb the costs order made by Master Kee.

35.  As regards the costs in respect of the Plaintiff’s appeal and the amendment application, there is no reason why costs shall not follow the event.

36.  Having concluded that the Plaintiff’s case is unarguably bad and utterly unmeritorious and that the court’s process has been abused, I am of the view that Plaintiff shall pay the Defendant’s costs on an indemnity basis.

37.  With a view to saving time, costs and judicial resources, I will conduct gross assessment in lieu of taxation.  Since the Plaintiff is not legally represented[16], I allow the Plaintiff to have 14 days to respond to the statement of costs lodged by the Defendant’s legal representatives.

38.  In the premises, I order that:-

(1)  the Plaintiff do pay the Defendant’s costs in respect of the appeal against Master Kee’s order 15 April 2024 and the inter partes summons dated 9 August 2024 on an indemnity basis to be summarily assessed; and

(2)  the Plaintiff do lodge and serve a statement of objection in response of the Defendant’s statement of costs within 14 days.

Other Matters

39.  Lastly, I thank Mr Clark for his most helpful assistance.