陳永霖 v. PURE INTERNATIONAL (HK) LTD

DCCJ1757/2016

[2018] HKDC 1019

IN THE DISTRICT COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

CIVIL ACTION NO 1757 OF 2016

------------------------------

------------------------------

---------------

DECISION

---------------

INTRODUCTION

1.  Following a Notice of Discontinuance sent by the plaintiff to the defendant and filed with the Court on 7 May 2018, I ordered the adjourned hearing for the defendant’s striking out summons scheduled for 11 May 2018 be vacated and the parties to make written submissions as to why the costs of the whole proceedings, including the costs of the defendant’s striking-out summons, should not be borne by the plaintiff on an indemnity basis and to be paid forthwith, with certificate for counsel.

2.  The plaintiff’s Notice of Discontinuance was filed without leave of the Court on 7 May 2018.

3.  I understand that the plaintiff had insisted to file the above Notice of Discontinuance at the Registry without leave on 7 May 2018 despite being advised by the staff at the Registry that leave of the Court would be required under such circumstance.

4.  Pursuant to my directions issued on 9 May 2018, the defendant has duly lodged its written submissions on costs on 23 May 2018 but the plaintiff has failed to do so.

5.  As defence had been filed and served on the plaintiff as early as on 30 May 2016 in this case, the plaintiff could only discontinue his action against the defendant with the leave of the Court.

6.  Since the purported Notice of Discontinuance dated 7 May 2018 was filed without leave of the Court, it is invalid insofar as the plaintiff was trying to use the same as notice to discontinue his action against the defendant. 

7.  As the plaintiff filed the Notice of Discontinuance without leave, I directed that a hearing be fixed before me on Thursday, 12 July 2018 for the plaintiff to explain the basis of his filing this document and to hear the defendant’s submissions on how it would like to dispose of its striking out summons.  I said I would also like to hear submissions on the costs impact resulting from the purported service of such notice on the whole proceedings, including the costs relating to the defendant’s striking-out summons and the previous costs orders made against the plaintiff.

8.  Following the above, a notice of hearing was sent to the parties by the Court and the parties were directed to attend the hearing either in person or by their legal representatives on 12 July 2018.  It has been specifically mentioned by the Court that appropriate orders, including orders on costs, would be made against any parties who fail to attend the above hearing. 

9.  As expected, the plaintiff failed to turn up at the hearing on 12 July 2018.  The defendant was represented by Mr Wilson Tam, a solicitor from Messrs Kennedys.

10.  At the hearing, the defendant submits that the Notice of Discontinuance, which was filed without leave of the Court, should be set aside and the plaintiff’s case should be dismissed.  It further submits that the defendant should be entitled to the costs of the whole proceedings, including the costs of the defendant’s striking-out summons dated 27 July 2017, on top of the two costs orders dated 16 June 2016 and 9 March 2018 made against the plaintiff, on an indemnity basis and to be paid forthwith, with certificate for counsel with enhanced interest of the costs from 11 July 2016 onwards.

BACKGROUND

11.  The defendant is a fitness service provider and runs a number of fitness centres in Hong Kong. The plaintiff entered into a written agreement with the defendant on 20 February 2016 in relation to the provision of fitness services (“the Agreement”).

12.  In short, it is the defendant’s case that:

(1)  Due to repeated breaches of the Agreement by the plaintiff which had caused, inter alia, disturbances to other users of the defendant’s facilities, the defendant was entitled to and did terminate the Agreement with the plaintiff on 12 April 2016;

(2)  Alternatively, by reason of the repeated failure and/or refusal of the plaintiff to pay heed to the repeated advice of the defendant’s staff as well as the plaintiff’s behaviour, the plaintiff evinced an intention not to be bound by the terms of the Agreement and has repudiated the same, and such repudiation was accepted by the defendant on 12 April 2016 by issuing a termination email.

13.  On 15 April 2016, as a gesture of goodwill and without admitting any liability, the defendant refunded a sum of $1,786 to the plaintiff, representing:

(1)  $499 enrolment fee;

(2)  $788/30 days x 19 days = $499 (for 19 unused days in April); and

(3)  $788 monthly fee (for the unused last month). 

14.  Despite the above, the plaintiff, acting in person, issued the writ of summons together with a statement of claim on 18 April 2016 in these proceedings (“the SOC”).

15.  Save for the general complaints made in respect of the plaintiff’s use of the defendant’s fitness services, it is difficult to ascertain from the SOC the exact causes of action or the legal basis on which the plaintiff was basing his claim on.

16.  Perhaps not surprisingly, by a summons dated 27 July 2017, the defendant sought to strike out the SOC (“the Summons”).

DISCUSSION

17.  On 9 March 2018, at the substantive hearing of the Summons before me, the plaintiff attempted to adduce some new documentary evidence which had not been previously exhibited.  They mainly consisted of some email and whatsapp exchanges between the parties.   I disallowed the referral to such documents unless the plaintiff was prepared to formally exhibit them under a supplemental affirmation.  As a result, the plaintiff applied for an adjournment in order to have the chance to file a supplemental affirmation. I reluctantly acceded to the request as he was not represented, but only on the condition that the plaintiff was to pay all the wasted costs occasioned by his late application.  I also made a summary assessment of the wasted costs involved due to the adjournment and ordered the plaintiff to pay the sum before he was allowed to file his affirmation.   

18.  The plaintiff never filed any affirmation. Nor did he pay any of the wasted costs caused by the adjournment ordered by the Court.

19.  On 8 May 2018, ie just 3 days before the adjourned hearing of the Summons, the defendant’s solicitors received the Notice of Discontinuance from the plaintiff dated 7 May 2018 sent to them under the cover of an email.  The same notice was filed in Court by the plaintiff on the day before.

Applicable legal principles

20.  Under Order 21, rule 2 of the Rules of the District Court (“RDC”), a party may, without leave of the Court, discontinue an action at any time not later than 14 days after service of the defence on him.

21.  Under Order 21, rule 3 of the RDC, “a party may not discontinue an action (whether begun by writ or otherwise) or counterclaim, or withdraw any particular counterclaim made by him therein, without leave of the Court, and the Court hearing an application for grant of such leave may order the action or counterclaim to be discontinued, or any particular claim made therein to be struck out, as against any or all of the parties against whom it is brought or made on such terms as to costs, the bringing of a subsequent action or otherwise as it thinks just.”

22.  Under O.21, r.5(1) of the RDC, where a party has discontinued an action or counterclaim or withdrawn any particular claim made by him therein and he is liable to pay any other party’s costs of the action or counterclaim or the costs occasioned to any other party by the claim withdrawn, then, if, before payment of those costs, he subsequently brings an action for the same, or substantially the same, cause of action, the court may order the proceedings in that action to be stayed until those costs are paid.

23.  The Court of Appeal in Choy Yee Chun (The Representative of the estate of Chan Pui Yiu) v Bond Star Development Ltd [1997] HKLRD 1327 reviewed the relevant authorities and summarised the law as follows.  A taxation of the successful party’s costs on an indemnity basis could properly be ordered where the proceedings were scandalous or vexatious, or had been initiated or prosecuted maliciously, or for an ulterior motive, or in an oppressive manner. Any proceedings instituted or prosecuted in such circumstances as to constitute an affront to the Court could properly be the subject of a direction for the taxation of the successful party’s cost on the indemnity basis. See Hong Kong Civil Procedure 2018,§62/App/12 p 1286.

24.  Further, under O 22, r 23(4) of RDC, where a plaintiff fails to do better than a sanctioned payment, the Court may also order that the defendant is entitled to:

(1)  his costs on the indemnity basis after the latest date on which the plaintiff could have accepted the payment or offer without requiring the leave of the court; and

(2)  interest on the costs at a rate not exceeding 10% above judgment rate.

Plaintiff to pay defendant’s costs on indemnity basis for the whole proceedings including the Summons

25.  I agree with the defendant’s submissions that the alleged causes of actions raised by the plaintiff in the SOC bound to fail as they have not disclosed any reasonable causes of action.

26.  Further, I am satisfied that the evidence referred to in Cristiane Ross’s 1^st affirmation filed on behalf of the defendant in support of the Summons suggest that all of the claims made by the plaintiff in the SOC are so manifestly misconceived that they have no prospects of success.

27.  In my view, even if the plaintiff did not purportedly try to discontinue the proceedings, the SOC would have been struck out on the grounds that it was frivolous or vexatious and/or an abuse of the process of the court.

28.  It is trite that proceedings instituted or prosecuted in such circumstances as to constitute an affront to the Court could properly be the subject of a direction for the taxation of the successful party’s costs on the indemnity basis.  In my judgment, this case is a classic example of how a plaintiff who chose to take out a baseless and frivolous claim without any proper foundation, both on fact or law, only to quickly discontinue it when asked to pay part of the wasted costs upfront, was wasting the valuable time and resources of the Court and that of his opponent’s.  In my view, such behaviour constitutes to an affront to the Court. 

29.  At the hearing on 12 July 2018, I had been informed by the defendant’s solicitor that, as a matter of public record, a person bearing the same name of the plaintiff (both in English and in Chinese) has been known to have issued over 140 cases in various levels of our Courts against different defendants in recent years.  The defendant has reasons to believe that it was the plaintiff who had issued most if not all of those actions.  Given the way how the plaintiff behaved in the present proceedings, I am not surprised at all. In my view, this kind of abuses of the court’s process must be stopped and those who are prepared to issue such baseless claims with no intention to carry them through must be visited with the harshest terms on costs.

Defendant’s alternative position – the plaintiff to pay the defendant’s costs on indemnity basis with enhanced interest rate from 9 August 2016

30.  On 11 July 2016, the defendant, via its former solicitors, had paid HK$5,000 into court in settlement of the plaintiff’s claim under O 22, r 8(2) of the RDC (“the Sanctioned Payment”).

31.  The Sanctioned Payment was rejected by the plaintiff by way of an email to the defendant’s former solicitors on the same day.

32.  As the plaintiff failed to do better than the Sanctioned Payment, the defendant is entitled to apply to the Court for costs to be borne by the plaintiff on an indemnity basis with enhanced interest at least from the date when the Sanctioned Payment lapsed (ie from 9 August 2016) under O 22 r 23(4) of the RDC.

33.  I agree with the defendant’s above alternative submissions.

Ruling of the Court

34.  In the aforestated premises, I would allow the defendant’s application to strike out the plaintiff’s claim herein on the ground that the SOC disclosed no reasonable causes of action and/or it was frivolous or vexatious and/or an abuse of the process of the Court. I hereby allow the plaintiff’s application in the terms as stated in the Summons, including a costs order against the plaintiff, with certificate for counsel.

35.  As the purported Notice of Discontinuance was filed without leave of the Court, it is invalid and I shall hereby order it to be set aside with costs to the defendant.

36.  In so far as costs is concerned, I am of the view that the defendant is entitled to recover its costs of the whole proceedings from the plaintiff on an indemnity basis, including the costs of the striking-out application (this would include the 2 previous costs orders made against him due to the adjourned hearing), with enhanced interest on the costs from 9 August 2016 at 4.5% above judgment rate (see Golden Eagle international (Group) Ltd v GR Investment Holdings Ltd[2010] 3 HKLRD 273, per Johnson Lam (as the v-p that was at §§16-19) with certificate for counsel (for the hearing of the Summons on 9 March 2018), to be paid forthwith after summary assessment. 

37.  Having studied the statement of costs submitted by the defendant’s solicitors on 24 July 2018 and the plaintiff having failed to file any objection thereto, I hereby would summary assess the costs of the proceedings at $178,090. This would include the previously assessed sum of $45,593 as wasted costs ordered by the Court on 9 March 2018.  Further, as the plaintiff has failed to do better than the Sanctioned Payment made, I would further order that he pay enhanced interest on the above sum from 9 August 2016 onwards.