TSE WING TING VENTINA v. NG CHIT CHUNG EDDIE AND OTHERS

DCCJ3888/2015

IN THE DISTRICT COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

CIVIL ACTION NO 3888 OF 2015

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DECISION

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1.  The 1^st defendant (“Ng”) applied by summons dated 14 September 2015 to strike out the plaintiff’s (“Tse’s”) Statement of Claim and Tse’s action against Ng pursuant to O 18, r 19(1)(a) of the Rules of the District Court (Cap 336H) (“RDC”) on the ground that it discloses no reasonable cause of action against Ng. The summons was heard but dismissed with costs to Tse by the Master on 2 November 2015. By a Notice of Appeal issued on 6 November 2015, Ng appeals against the Master’s decision.

2.  I am effectively hearing the application afresh pursuant to O 58 of the RDC.

Tse’s application for adjournment of appeal hearing

3.  This appeal was fixed to be heard on 14 December 2015.  Miss Kitty Tsang, Counsel for Ng, lodged her Skeleton Submissions for the 1^st defendant on 7 December 2015.  Tse, instead of lodging with the court her skeleton submissions in reply, sent to the court on 10 December 2015 a letter applying for an adjournment of the appeal hearing.  She attached to her letter certain “Without Prejudice” letters/messages exchanged between her and Ng’s lawyers. Tse was informed by the court to attend the hearing on 14 December 2015 as scheduled.

4.  When Tse and Miss Tsang appeared before me on 14 December 2015, I explained to Tse the procedure and rules concerning an application for striking out pleadings and the relevant appeal.  Tse was asked if she still applied for an adjournment and she confirmed her application on the grounds that:-

(1)  There had been ongoing discussions between the parties.  Therefore, she was not well-prepared for the appeal hearing.

(2)  She was then not residing in Hong Kong.  Hence, she needed to travel to Hong Kong for the hearing.

5.  Miss Tsang handed up photocopies of certain emails exchanged between Tse and Ng’s solicitors on 8 and 9 December 2015 and a letter dated 8 December 2015 concerning the appeal documents to show that Tse should have more than enough time to prepare for this appeal hearing.  I asked Miss Tsang if she would have any objection for me to continue hearing this appeal if I were to refuse Tse’s application for an adjournment bearing in mind that I had read some of the “Without Prejudice” materials sent to the court as attachments to Tse’s said letter.  Miss Tsang confirmed on behalf of Ng that her client would not have any objection.

6.  Having considered the grounds relied upon by Tse and the objections submitted by Miss Tsang, I refused Tse’s application for adjournment and decided to proceed with hearing the appeal.

7.  In deciding that I can continue to hear the appeal, I have adopted and applied the two-stage approach set out by Stanley Burnton J in Berg v IML London Ltd [2002] 1 WLR 3271 where the court considered the problem of how a judge should deal with an improper disclosure of without prejudice correspondence.  The first question that should be asked is whether subjectively the judge considers that he is disabled from fairly continuing with the case.  The second question is whether the judge can continue with the case without there being a real possibility or real danger of there being seen by a fair-minded and informed observer to be an unfair trial.  The test as stated by Stanley Burnton J in Berg is the same as the test for apparent bias in Hong Kong stated in Deacons v White & Case LLP (2003) 6 HKCFAR 322.  The test in Berg has also been applied in Hong Kong by Deputy Judge Eugene Fung SC in Tang Yau Keung v Tang Choi Yau [2014] 2 HKLRD 940.  To the first question, my answer is that I am not so disabled.  To the second question, I have come to the view that I can continue without there being such a real possibility or real danger.

Background

8.  When Tse issued the Writ of Summons herein on 24 August 2015, it was endorsed with a full Statement of Claim.  Since no evidence shall be admissible on an application for striking out the Statement of Claim under O 18, r 19(1)(a) (see RDC, O 18, r 19(2)), Ng is not allowed to file any affidavit evidence in support of his application.

9.  According to what has been pleaded by Tse in her Statement of Claim in this action, her case against the 3 defendants can be summarized as follows:-

(1)  On or about 8 March 2015, Tse received a cold call from a person who claimed to be the representative of a company called Golden Age Bullion Limited (“Golden Age”).  As a result, on 12 March 2015 Tse had a meeting with one Mr Yeung Pok Man (“Yeung”), who at the material time was the Account Manager of Golden Age, in Central.  Yeung told Tse that it would be very safe to invest in his company.

(2)  On 13 March 2015, Tse went up to the office of Golden Age in Wanchai where she met with Yeung and one Ms Carmen Lau (“Lau”), the 2^nd defendant in this action.  Lau introduced herself as the Administration Manager of Golden Age and the China Services Committee Co-Chairperson of North Kowloon’s Lions Clubs, subsidiary of Lions Clubs International District 303 Hong Kong and Macao (“Lions Clubs”).  Yeung told Tse that the boss of the Golden Age (ie Ng) (who is the 1^st defendant in these proceedings) “is a member of Lions Clubs and was the President of North Kowloon Lions Clubs last year, namely 2014.”

(3)  Tse said that Yeung told her that Golden Age was then a “Government regulated agency and a member of the China Gold and Silver Exchange Society”. She said she was persuaded by Lau and Yeung to sign a contract with “Golden Bullion” without going through its terms.  Judging from the context of the Statement of Claim, it appears that Tse was referring to “Golden Age”.  Tse did not say anything about the nature of the said contract, but on the basis of what Tse said in the Statement of Claim the contract seems to be a document for the opening and maintenance of an account with Golden Age for trading and investing in London Gold.  Tse said Lau further told her to transfer money to Lau’s personal account in China and that she would then transfer the money into Tse’s “Golden Age account”.  Tse pleaded that she gave Lau CNY60,000.00 in cash.

(4)  On the following day on 14 March 2015, Tse was assessed by Golden Age over the phone to have a low risk acceptance level.  Tse said she also requested to leave one-third of her capital which was said to be CNY70,000.00 unused.

(5)  Yeung asked Tse for the password of her account maintained with Golden Age, “claiming that he needed to safeguard the account”.  Yeung told Tse “not to worry because the maximum number of trades he could do per month was 10.” Tse gave the password to Yeung.  Yeung later changed the password.

(6)  On 19 March 2015, Yeung told Tse that he had already made a profit of CNY5,000.00 for Tse after doing only two trades for her.  He asked Tse to put in more capital.   He told Tse that it was safe to invest with Golden Age and he even suggested Tse to test it by withdrawing money from her Golden Age account.  Tse then gave instructions to transfer CNY30,000.00 from her Golden Age account to her personal account.  On the following day, Lau transferred CNY30,000.00 from her personal account in China to Tse’s personal account in China.

(7)  From 30 March 2015 to 3 April 2015, Yeung rang Tse many times and asked Tse to put in more money into her Golden Age account.  Tse said that she needed more time.

(8)  On 3 April 2015, Tse “followed the instructions of [Yeung]” and transferred CNY65,000 into Lau’s personal account in China.

(9)  On 8 April 2015, Yeung told Tse that she had to put in more capital because Yeung had “already told his boss of Golden Age that [Tse] will invest more.”  Tse “followed Yeung’s instructions and transferred CNY99,500 into [Lau’s] personal account in China.”  As a result, up to 8 April 2015, Tse had made 3 transfers to Lau’s personal account in China for a total sum of CNY195,000.  Up to such time, only 2 trades had been executed in Tse’s account maintained with Golden Age.

(10)  In the small hours of 10 April 2015, Tse checked the status of her Golden Age account when she was in Taipei.  She noticed a lot of “negative red numbers”.  She immediately sent phone messages to Yeung instructing him to stop trading and transfer the unused capital into her account.  Tse also tried to call Yeung by phone many times without success.  Yeung finally replied to Tse’s request in the mid-morning.

(11)  On 15 April 2015, Yeung sent a phone message to Tse saying that “[Tse’s] account is locked”.  Yeung said “it is difficult to explain on the phone so he will explain the situation to [Tse] in person when she comes back to Hong Kong.”  He assured Tse that “the account is now making a profit of around CNY10,000”.  He said to Tse that “he has used his skills to turn the loss into profit”.

(12)  Tse returned to Hong Kong on 16 April 2015.  She was told by Yeung via phone message that “her account is locked”, but Yeung assured her that “he has used his skills to turn the loss into profit, and now the account is making a profit of around CNY10,000”.  Yeung said Tse must put in CNY100,000 more to “unlock the account”, otherwise “no money can be taken out”.  Yeung also told Tse that the amount of money in her account was then “214000” which figure, as alleged by Tse, was demonstrated to be false by the account statement of 15 April 2015.

(13)  Tse went up to the office of Golden Age on 17 April 2015.  Yeung reiterated to Tse that her account was making a profit of CNY10,000 but she needed “to put in another CNY100,000 to unlock it”.  Yeung told Tse that she could take out CNY314,000 after putting in CNY100,000.  However, her account would remain locked and no money could be taken out if Tse did not put in any more money. Tse told Yeung that she would need time to think it over.

(14)  On 20 April 2015, Tse brought 2 persons, who were described by Tse as financial experts, namely one Mr Chow and one Mr Wong, to the office of Golden Age.  After talking to Yeung and one Mr Paul Chu (“Chu”), who was Yeung’s supervisor at the material time, Tse and the said Mr Chow and Mr Wong came to the view that Yeung had been “misleading and deceiving [Tse] about the amount of money in the account”.  They therefore decided to call the Police. Tse said the Police arrived and gave Golden Age one week until 27 April 2015 to give an explanation.

(15)  Mr Chow and Mr Wong concluded that “since [Tse’s] account was locked, [her] account was losing CNY166,140 regardless of the change in Gold Price”. Upon the suggestion of the police officer and Chu, “[Tse] closed position [of] all the open trades with the help of [Chu] at Golden Age, in front of [Mr Chow and Mr Wong].”  There was a loss of CNY169,884 (equivalent to HKD 202,220), leaving a balance of only CNY33,224.

(16)  By 27 April 2015, Golden Age failed to give Tse any response or explanation.  Tse filed a complaint with Golden Age.  According to Tse’s pleaded case, Ng then instructed Lau to handle the complaint.  Lau said that Tse knew about every transaction conducted by Yeung, but Yeung was willing to compensate Tse for the interest charges, namely CNY5,777.  Tse responded that she was not contented with the proposed compensation.  According to Tse’s pleased case, Lau ignored her since then.  Tse then contacted Ng who then instructed another subordinate Ms Kibi Wong (“Ms Wong”) to handle the case.  Ms Wong requested to and did meet with Tse in person to discuss the compensation matter.  Subsequent to the meeting, Ms Wong replied to Tse by email that Yeung was willing to pay CNY7,000 as compensation on a without liability basis.  Tse rang up Ms Wong but the latter said that she “could no longer respond to [Tse]”.  Since then, according to Tse’s pleaded case, all the defendants in this action and Ms Wong all chose to ignore Tse.

(17)  From 21 April 2015, Tse asked several financial experts to look at her Golden Age account statements.  According to Tse, it was concluded that:-

(a)  From 8 April 2015 to 15 April 2015, Golden Age had conducted 214 trades, ignoring Tse’s instructions to stop trading given in the morning of 10 April 2015.  At the time when Tse instructed Yeung to stop trading, there was a balance of CNY83,657 in her account.  However, a further loss of CNY50,433 (equivalent to HKD63,041) was incurred since then and Tse’s account was left with a closing balance of CNY33,224 only.

(b)  Lau had asked Tse to transfer funds into Lau’s personal bank account in China instead of Golden Age’s company registered bank account.

(c)  Yeung had deceived Tse on numerous occasions about the amount of money in Tse’s account maintained with Golden Age and represented that there was profit in the account when in fact almost all the money had been lost.

(d)  In the contract with Golden Age, the authorisation for third party trading was cancelled.  Hence, representative of Golden Age should obey the rules and not have taken advantage of Tse’s lack of knowledge and asked Tse for her password and traded on her behalf by using her account.

(e)  Yeung promised that Golden Age only allowed a maximum of 10 trades per month.  However, from 8 April 2015 to 15 April 2015, Lau had conducted 241 trades.

(f)  Yeung also falsely claimed that Golden Age was a member of the China Gold and Silver Exchange Society and a government regulated agency.  On Golden Age’s website at “ga9999.com”, it is falsely stated that they are partners with Top World Bullion (“Top World”) which is a member of the China Gold and Silver Exchange Society, but representative of Top World denied having any relationship with Golden Age.

(g)  On Golden Age’s website, it is stated that the spread for buying and selling London Gold is USD0.50.  However, when Tse closed her positions on 20 April 2015, she was charged an actual spread of USD0.90.  On the other hand, it is clearly stated in the contract made between Golden Age and Tse that she would be charged only CNY78 per trade.

(h)  Tse has filed a claim against Yeung in the Small Claims Tribunal for not following her instructions to stop all trades and causing her a loss of HKD63,041.  Yeung has agreed to compensate Tse for HKD50,000.  However, Yeung told Tse that Golden Age had withheld all his commission and he could only pay Tse by 20 instalments at HKD2,500 each.  One Ms Wong of Golden Age had also asked Tse to sign a contract to give up filing any claims against Golden Age, but Tse refused.  Yeung said that he was not the one who conducted the trades nor controlled Tse’s account, it was actually his team leader and his supervisor, including but [not] limited to Chu (ie the 3^rd defendant), who conducted the trades in Tse’s account, without Tse’s consent.  Their purpose was to do as many trades as possible within a short amount of time to produce hefty sums of commissions for themselves.  Yeung’s lies to Tse were also told under the instructions of his team leader and supervisor, including but not limited to Chu.  Yeung has since resigned from Golden Age.

(i)  Tse now claims against the defendants for her loss of HKD139,179.00, being HKD202,220.00 minus the loss of HKD63,041.00 caused by Yeung and his supervisors for ignoring Tse’s instructions to stop trade.

Principles for striking out

10.  The court can strike out pleadings in plain and obvious cases either of its own motion or on application.  There should be no trial upon affidavit. Disputed facts are to be taken in favour of the party sought to be struck out. Nor should the court decide difficult points of law in striking out applications.  The claim must be obviously unsustainable, the pleadings unarguably bad.  The claim must be impossible, not just improbable, to succeed before the court will strike it out: Hong Kong Civil Procedure 2016, Volume 1, para 18/19/4 at p 448.  If, on a careful reading of the Statement of Claim, it can be seen that there is no cause of action, a court can, and probably will, order it to be struck out: Cheung Chui Sou Ying v The Personal Representatives of Cheung Yuk Luen [1981] HKLR 585, at 588H.

11.  In his Summons issued on 14 September 2015, Ng sought an order that:-

(1)  Tse’s Statement of Claim herein be struck out on the ground that it discloses no reasonable cause of action against Ng;

(2)  Tse’s action against Ng be dismissed; and

(3)  The cost of the application to be paid by Tse to Ng forthwith.

12.  Since Ng only seeks to strike out the Statement of Claim on the ground that it discloses no reasonable cause of action against him, the court will consider the pleading without reference to evidence: RDC, O 18, r 19(2).

No reasonable cause of action and fraud

13.  Tse’s case against the defendants is basically one based on fraud.  This is evident from paragraph 5 of the Statement of Claim in which Tse pleads that:-

“The Plaintiff was engaged by the Defendants in relation to a fraudulent case regarding the Plaintiff’s London Gold account at Golden Age.”

14.  To allege fraud against a person is a serious matter.  The law only allows fraud to be pleaded when there is sufficient evidence.  Fraud must then be specifically pleaded and the party making the allegations must give full particulars of the fraud.  The Court would not allow a party to plead a vague and unparticularised case of fraud in the hope of making it good after discovery.  See Hong Kong Civil Procedure 2016, Volume 1, para 18/8/13 at p 414-5.

15.  Tse purports to give the particulars of fraud in paragraphs 6 to 24 of the Statement of Claim.  However, Tse’s case against Ng is far from clear from the Statement of Claim.  Specific references to Ng in the Statement of Claim can be found only in paragraphs 2, 8, 9 and 23 whilst general references to “the defendants” (which includes Ng as the 1^st defendant) can be found only in paragraphs 5, 23 and 24.  It is noted that Tse has not joined Golden Age as a defendant in this action despite it is her pleaded case that she entered into the relevant contract with Golden Age for opening and maintaining an account with Golden Age for trading and investing in London Gold.  It is also noted that Tse has not pleaded a case of vicarious liability or any factual basis in support of a case of vicarious liability against Golden Age or Ng for the act or conduct of Yeung, Lau and/or Chu.  Nor can I find any claim for lifting of the corporate veil of Golden Age or any facts which can be relied upon by Tse in support of such a claim if pleaded in the Statement of Claim.

16.  In paragraph 2, Tse pleads that:-

“At all material times, the 1^st Defendant, Mr. Ng Chit Chung Eddie (“1^st Defendant”) is and was the Director and major shareholder of Golden Age Bullion Limited (“Golden Age”) …”

17.  In paragraph 8, Tse pleads that:-

“… Mr. Yeung emphasized the boss of the company, i.e. the 1^st Defendant is also a member of Lions Clubs and was the President of North Kowloon Lions Clubs last year, namely 2014.”

18.  In paragraph 9, Tse pleads that:-

“… The Plaintiff believed Golden Age was a reliable company because of the 1^st and 2^nd Defendants’ positions in Lions Clubs and the 2^nd Defendant’s Lions Clubs name card. Therefore the Plaintiff signed the contract and gave the 2^nd Defendant CNY 60,000 in cash.”

19.  In paragraph 23, Tse pleads that:-

“… The Plaintiff filed a complaint to Golden Age and then the 1st Defendant instructed the 2nd Defendant to handle the complaint. …  Afterwards, the 2nd Defendant ignored the Plaintiff.  Then the Plaintiff contacted the 1st Defendant and the 1st Defendant instructed another subordinate Ms. Kibi Wong (“Ms. Wong”) to handle the case. …  Afterwards, all the Defendants and Ms. Wong all chose to ignore the Plaintiff despite the Plaintiff’s attempts to resolve this matter amicably.”

20.  In paragraph 24, Tse pleads that:-

“● Golden Age locked the Plaintiff’s account without notifying the Plaintiff, thus leaving the Plaintiff with no choice but to invest more money to unlock the account or lose all the money in the account. This is the Defendants’ tactic to force the Plaintiff to put in more money into the account.

……

● … Thus, the Defendants charged a further CNY 75,192 (equivalent to HKD 93,990) to the Plaintiff without her consent. On the contract with Golden Age, it clearly stated Golden Age will charge only CNY 78 per trade.

……

● Thus the Plaintiff now claims the Defendants for her loss of HKD 202,220 minus the loss of HKD 63,041 caused by Mr. Yeung and his supervisors for ignoring the Plaintiff’s instructions to stop trade = HKD 139,179.”

21.  It can be seen from the relevant paragraphs of the Statement of Claim that there were not any allegations of fraud made by Tse against Ng.  Taken Tse’s story as a whole, most of the allegations were directed against Yeung (who is not a defendant in this action) and Lau with some allegations made against Chu as well.  According to the Statement of Claim, Tse’s only allegations concerning Ng are as follows:-

(1)  Ng is and was at all material times the director and major shareholder of Golden Age;

(2)  Yeung told Tse that Ng was the past President of North Kowloon Lions Clubs in 2014 and was then still a member of Lions Clubs in 2015.

(3)  Tse believed Golden Age was a reliable company because of the positions of Ng and Lau in Lions Clubs.

(4)  After Tse had lodged a complaint with Golden Age, Ng at first instructed Lau and subsequently instructed Ms Wong to handle the complaint.  However, they all chose to ignore Tse subsequently.

(5)  Golden Age “locked” Tse’s account so as to force her to invest more. This is “the Defendants’ tactic to force the Plaintiff to put in more money into the account.”

(6)  The defendants imposed a charge higher than the contract rate without Tse’s consent.

22.  It is quite clear that:-

(a)  points (1) and (2) are facts about the background of Ng;

(b)  point (3) concerns only with Tse’s own belief about the reliability of Golden Age;

(c)  point (4) is about Ng instructing Lau at first and Ms Wong subsequently to handle the complaint of Tse and there is no allegation of any impropriety on the part of Ng;

(d)  point (5) refers to an act of Golden Age in “locking” Tse’s account; and

(e)  though Tse alleges under point (6) that “the Defendants charged a further CNY75,192 (equivalent to HKD93,990) to the Plaintiff without her consent”, it is without doubt that, judging from the context of the pleading, Tse is actually referring to Golden Age and her case is that Golden Age is only entitled to charge her CNY78 per trade according to the contract made between Tse and Golden Age.

23.  Looking at the Statement of Claim as a whole, Tse has not pleaded a case against Ng in fraud or otherwise.  Nor do I see any reasonable cause of action against Ng personally is disclosed on the basis of the facts pleaded by Tse in her Statement of Claim.  A reasonable cause of action means a cause of action with some chance of success when only the allegations in the pleading are considered.  See Drummond-Jackson v British Medical Association [1970] 1 WLR 688, CA, per Lord Pearson. 

24.  To conclude, the claim against Ng ought to be struck out and the action against him be dismissed.  In arriving at my decision, I have also considered if Tse’s claim against Ng can be saved by amendment.  However, there is no reason to believe that Tse’s claim against Ng can be improved by any amendment short of something so radical as to amount to a totally new case which would probably provoke a fresh application to strike out.  I therefore do not consider the option of amending the Statement of Claim is open to Tse in this action before me.

25.  Before the hearing concluded, I asked the parties to give me their oral submissions on costs.  Miss Kitty Tsang submitted that should this appeal be successful, Ng would ask for costs of this appeal and the costs of Ng’s Summons, including the costs of the hearing before the Master below, to be paid by Tse to Ng.  She also asked for a certificate for counsel for this appeal hearing but not for the hearing below before the Master.  I accept Miss Tsang’s submissions which appear to be reasonable.   Since I have now decided that the claim against Ng be struck out and the action against him be dismissed, I would also make an order for costs against Tse in favour of Ng as submitted by Miss Tsang together with the costs of the action between Tse and Ng.  All such costs shall be taxed, if not agreed, on a party-and-party basis with certificate for counsel.

Order

26.  I therefore allow the appeal and make the following order:-

(1)  The order of Master Cheung dated 2 November 2015 be set aside;

(2)  Such parts of Tse’s Statement of Claim, insofar as they constitute or amount to a claim against Ng and in particular paragraph 5, those parts of paragraph 24 as discussed in paragraph 20 hereinabove, and the relevant part of the Prayer of the Statement of Claim herein, be struck out; and that the action herein against Ng be dismissed;

(3)  Costs of the action herein between Tse and Ng, including those of and occasioned by his application, the hearing below and this appeal, be to Ng;

(4)  All costs shall be taxed, if not agreed, with certificate for counsel for this appeal but not the hearing before the Master below.