TOU WAN YEUNG t/a ART DESIGN & DECORATION CO v. TO WAI HEI EDWARD AND ANOTHER

DCCJ 707 of 2010

IN THE DISTRICT COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

CIVIL ACTION NO. 707 OF 2010

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BETWEEN

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J U D G M E N T

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INTRODUCTION

1.  This is an application by the 1^st Defendant, based on Order 18, rule 19 of the Rules of District Court to strike out the Plaintiff’s claim in this action against him on the ground that it discloses no reasonable cause of action; and/or it is scandalous, frivolous or vexatious; and/or it may prejudice, embarrass or delay the fair trial of the action; and/or it is otherwise an abuse of the process of the Court.

BACKGROUND

2.  This action arises out of a decoration work at Flat B and D of Jade Court in Yau Yat Chuen (“the Premises”).  The Premises are two interconnecting units and each of the Defendants, being husband and wife, owned one unit in their sole name.  The Premises is the home for the Defendants and their family members.  The Plaintiff is the contractor to perform the decoration work. 

3.  After some negotiations, the Plaintiff had prepared 4 quotations (“the Quotation”) which were addressed to the 2^nd Defendant and signed by the 2^nd Defendant (page 77-84 of the Bundle).  In the course of the work, 3 invoices were issued, one addressed to the 1^st Defendant (page 85 of Bundle) and two to the 2^nd Defendant (page 86-87 of Bundle).  Since the Defendants had only made part payment of the decoration costs, the Plaintiff commenced this proceedings to claim for the balance of it.

4.  According to the statement of claim, it is the Plaintiff’s pleaded case that “between 27^th February 2009 and 25^th September 2009, the parties entered into diver or one collective agreement (“the Agreement”); further and/or alternatively, the Agreement had been varied on diver occasions…” (page 5 of Bundle).  In its Answer to the Defendants’ Request for Further and Better Particulars about the alleged parties to the Agreement, it is the Plaintiff’s answer that “(1) The parties to the Agreement were the Plaintiff on the one part and the 1^st and 2^nd Defendant on the other part…The written Agreement was signed between the Plaintiff and the 2^nd Defendant on behalf of both Defendants…(1.1) Seven documents were issued by the Plaintiff, 4 of those were signed by the 2^nd Defendant and constitute written agreements and/or written variations…The oral agreements and/or variations have all been reduced into writing and become part(s) of the 7 documents. (3) The oral discussions and/or variations took place between about mid of March 2009 and about mid of September 2009 and/or were between the Plaintiff and the Defendants and/or one of them either in person(s) or by telephone.” (page 70-71 of Bundle).

1^st DEFENDANT’S CASE

5.  It is the 1^st Defendant’s contention in support of this striking out application that he was never a party to the contract hence should not be sued.

6.  It is submitted that the Plaintiff’s case is all agreement had been reduced into writing, i.e. the Quotation, this amounts to a written contract between the parties.  The Quotation was being signed by the 2^nd Defendant only and there is nothing in the Quotation to show that the 2^nd Defendant was signing for and on behalf of the 1^st Defendant nor is there anything to show that the Plaintiff had minded to include the 1^st Defendant as a party to the contract.  The only document addressed to the 1^st Defendant is an invoice (page 85 of Bundle) concerning work not related to the decoration project concerned in this case and eventually settled by a Mr. Ho who is the owner of the car parking space concerned.

7.  The 1^st Defendant is only paying for the decoration work by issuing cheques for the 2^nd Defendant who did not have a checking account.  The money comes from a transfer by the 2^nd Defendant.  And even though the 1^st Defendant did benefit from the decoration work, the case of Jackson v Horizon Holiday Ltd [1975] 1W.L.R. 1468 cited by the Plaintiff clearly ruled that the benefited party is not a party to the contract and cannot sue, and by a corollary, cannot be sued.

8.  The allegation that the 1^st Defendant had given instructions, made complaints or made payment takes the matter nowhere and at most shows that he was acting as agent for the 2^nd Defendant.

9.  Relying on the case of The Starsin [2004] 1 AC 715, it is submitted that to ascertain the identity of the parties and the capacity in which they entered into a written contract, one must “begin with the signatures and any accompanying statement which describes the capacity in which the persons who appended their signatures did so” (at page 794).  In the case of an unnamed principal, it is held in the case of Lai Wo Heung v Cheung Kong Fur Fty Co Ltd [2004] 1 HKLRD 959 that “who actually was the contracting party depend on what actually was the intention of the agent as well as the intention of the unnamed principal and if the contract was in writing, then what the contract says, constructed objectively in the light of the known circumstances, must be accorded much weight in deciding what the agent’s intention was at the time he entered into the contract” (at page 964-965).  Applying both cases to the Plaintiff’s case, there is nothing to support the fact that the 1^st Defendant is a party to the contract or that the 2^nd Defendant is acting as an agent for the 1^st Defendant.

THE PLAINTIFF’S CASE

10.  The Quotation and the invoices are not the only contract but only an acknowledgement by the 2^nd Defendant of the contracting terms which had in fact been agreed during verbal negotiations between the Plaintiff and the Defendants.  By the mere fact that it was being addressed to the 2^nd Defendant is not conclusive evidence that the 2^nd Defendant is the only party.  Both Defendants were principals entering into the verbal agreement with the Plaintiff. 

11.  The 1^st Defendant had always been actively involved in the decoration project, from negotiation to personally giving instructions to workers and approval of plans submitted by the Plaintiff.  He also funded the work and being one of the owners, did benefit from the work. Apart from the Quotation, there is this invoice addressed to the 1^st Defendant as a result of instructions directly from him.  All these factors points to the fact that the 1^st Defendant is a party to the contract.

12.  Alternatively, the 2^nd Defendant is acting as an agent for the 1^st Defendant.  The 1^st Defendant had represented to the Plaintiff that he was the principal by his involvement as stated in the preceding paragraph.  The 2^nd Defendant had also behaved in a manner confirming the 1^st Defendant was in fact “in charge of the proceedings”, a term used in the case of Lockett v A & M Charles Ltd [1938] 4All ER 170.  In any event, the intention of the 2^nd Defendant had to be dealt with at trial.

DISCUSSION

13.  It is only in plain and obvious cases that the court should exercise its summary powers to strike out any pleading : Hong Kong Civil Procedure 2011 para 18/19/4.  The 1^st Defendant would only succeed if the Plaintiff’s claim is obviously frivolous or vexatious or obviously unsustainable.  It must be impossible for the claim to succeed before the court would strike it out. There should not be a trial upon affidavit.  Disputed facts are to be taken in favour of the party sought to be struck out, i.e. the Plaintiff in this case. Where the legal viability of a cause of action is sensitive to the facts, an order to strike out should not be made.  The jurisdiction should not be exercised if it requires a minute and protracted examination of the documents and the facts of the case to see if the Plaintiff has a cause of action.

14.  The allegation by the Plaintiff that verbal agreement had been reached during negotiation between the parties including the 1^st Defendant is not pleaded in the Statement of Claim.  If the Plaintiff were to rely on such allegation, it has to be expressly pleaded.  It is clear from the pleadings of the Plaintiff that all agreement had been reduced into writing.  The Plaintiff’s contention that it was a verbal agreement evidenced by the Quotation is unfounded.  The Statement of Claim and the Answer to Request for Further and Better Particulars does not support such a contention.   

15.  Whether a contract was made by the 2^nd Defendant personally or as an agent on behalf of the 1^st Defendant depends on the intention of the parties and the surrounding circumstances.  It is a question of fact and may be established by evidence.  Such evidence is admissible even where the contract is in writing.  The signature on the Quotation is just a starting point to ascertain the fact but it is never conclusive.  Whether the behaviour of the Defendants as alleged by the Plaintiff did exist and whether such behaviour points to a conclusion of agency all turns on the court’s determination of the facts in dispute and the evidence to be adduced.  

16.  I am therefore not satisfied on the evidence that this is a case for the court to exercise its discretion to strike out the Plaintiff’s claim against the 1^st Defendant.  Taking the disputed facts in favour of the Plaintiff whose claim the 1st Defendant seeks to strike out, it is not plain or obvious that his case is obviously unsustainable.

The Order

17.  It is ordered that :-

a.   The 1^st Defendant’s application by summons dated 3^rd September 2010 be dismissed;

b.   Costs order nisi that the 1^st Defendant do pay the costs of the summons to the Plaintiff with certificate for counsel to be taxed if not agreed.  Unless any of the parties applies by summons to vary it, the costs order nisi shall be made absolute upon expiry of 14 days.