CHUI CHI TANG v. EDICO DEVELOPMENT LTD AND ANOTHER

DCCJ3239/2005

IN THE DISTRICT COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

CIVIL ACTION NO. 3239 OF 2005

D E C I S I O N

1.  The 1^st defendant applies for leave to appeal two orders of this court: the first order made on 22 December 2005 and dismissing the defendant's application to strike out the plaintiff's statement of claim; the second order of 29 March 2006 dismissing the defendant's application to the court to review the court's order of 22 December 2005 with costs.

2.  Miss Mak, at today's hearing of the application for leave to appeal, submitted leave should be granted to appeal both orders because leave will normally be granted unless the grounds of appeal have no realistic prospect of success.  She cited the Practice Notes of the English Court of Appeal in the case of Smith v Cosworth Casting Processes Ltd [1997] 4 All ER 840, referred to in the Hong Kong Civil Procedure 2006 under Order 59/14/7 on page 902. 

3.  The defendant's application by summons of 9 September 2005, was to strike out the plaintiff's statement of claim on the basis that it disclosed no reasonable cause of action and is scandalous, frivolous, vexatious and otherwise an abuse of the process of the court.

4.  At the hearing of the summons, the defendant disclosed the basis of its application was the time limitation of the plaintiff's claim for the return of deposit of $1 million paid to the defendant due to the defendant's breach of the agreement made between the plaintiff and the defendant. 

5.  The plaintiff's case relies on the defendant's breach of the agreement on 19 March 2005 when the defendant sold the properties to a third party.  Therefore, the plaintiff's case is the breach did not take place until that date and the cause of action did not accrue until that date.

6.  At the hearing of the defendant's summons, there were arguments raised on whether the agreement was affirmed by the correspondence between the parties, particularly those exchanged in November and December 2000.  I had explained in my decision dismissing the application that I found the plaintiff has a prima facie case, as pleaded in the statement of claim, that the plaintiff, claimed with the support of the correspondence of November and December 2000, that the agreement had been affirmed. 

7.  Order 18 rule 19 of the Rules of the District Court, as explained in 18/19/6 on page 328 of the Hong Kong Civil Procedure:

“A reasonable cause of action means a cause of action with some chance of success when only the allegations in the pleading are considered, so long as the statement of claim or the particulars disclose some cause of action, or raise some question fit to be decided by a judge or jury.  The mere fact that the case is weak and not likely to succeed is no ground for striking it out.”

8. Clearly, the defendant had failed to show in its application to strike out that the statement of claim did not disclose a reasonable cause of action.  The reasons have been explained in the decision, the summons was dismissed on 22 December 2005.

9. The defendant applied for review on 26 January 2006 and this application was heard and was dismissed by me because the defendant failed to show that this court has the jurisdiction to reverse its decision by way of review other than for clerical or typographical errors or slips under Order 42/1/3 of the Hong Kong Civil Procedure. 

10. I find the defendant's application for leave to appeal of, both the first and second orders, to be completely without merit and there is no realistic prospect of success.  Notes on Order 59/14/7, of course, is applicable in all applications for leave to appeal.  However, in a case where there is prima facie cause of action against a defendant, the court should not go into the merits and decide on the affidavit evidence and proceed to strike out the claim.  So long as a valid prima facie case has been pleaded the plaintiff should be allowed to further its claim that the case may be judged on its merits at the trial.

11.  The defendant is seeking to deprive the plaintiff of this chance.  I am not convinced the defendant has any prospects at all in succeeding in the appeal to strike out and to reverse the order dismissing the application to strike out the statement of claim.  I therefore refuse leave to appeal with costs. 

12.  I accept Mr Lo's submission that the defendant has done everything to delay the trial of this action and I order costs against the defendant to be paid, and if not agreed, to be taxable forthwith.