CHIN KAM CHIU v. FTI CONSULTING, INC AND OTHERS

HCA 1347/2019

[2020] HKCFI 611

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

ACTION NO 1347 OF 2019

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DECISION

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Background

1.  This is an application by the defendants by summons dated 18 September 2019 for an order that the statement of claim be struck out and the action dismissed, and, further, for an order restraining the plaintiff, Mr Chin Kam Chiu (“Chin”), from instituting legal proceedings against the defendants.  The hearing of the summons having been adjourned due to the coronavirus outbreak, the parties have consented for the application to be determined on the basis of written submissions without an oral hearing.  Although Chin initially acted in person, he has since instructed solicitors and counsel who have lodged written submissions replacing those prepared by Chin himself.

2.  What has given rise to the action is that Mr Sutton (“Sutton”), the 9^th defendant herein, who was a special advisor in the Forensic Accounting and Advisory practice of the 2^nd defendant (“FTI HK”), had issued a written report and given evidence in criminal proceedings brought by the Customs and Excise (“C&E”) Department against Chin for conspiracy to deal with property known or reasonably believed to represent proceeds of an indictable offence (DCCC 919/2015).  After a lengthy and, no doubt, for him, stressful trial, Chin was acquitted on 26 June 2019 and awarded costs.  Nevertheless, he feels aggrieved that he should have been investigated or prosecuted at all, and considers that both the C&E and the defendants herein are liable to him in damages.  He has, accordingly, instituted at least three actions arising out of this matter: one against the Commissioner of C&E and the Government (HCA 1284/2019), another against 15 persons including certain C&E officers and the Secretary for Justice and the DPP at the relevant times (HCA 1588/2019), and the third, ie the present action, against 13 defendants who are or were related to FTI HK.

3.  The writ in this action was issued on 25 July 2019, with a statement of claim specially indorsed thereon signed by Chin himself.  The document was drafted as a writ with both Chin and Keen Lloyd Holdings Ltd (“Keen Lloyd”) as plaintiffs, but Keen Lloyd’s name was deleted when the writ was issued, apparently because Chin realised that, as a company, Keen Lloyd could not, under rules of court, issue proceedings without acting through solicitors.

4.  To put the matter in context, it is necessary to set out briefly what happened in the criminal proceedings.

5.  On 3 June 2013, the 2^nd defendant (“FTI HK”) was engaged by C&E to provide forensic accounting services on suspected money laundering in respect of two Hong Kong companies, Shan Ao International Ltd (“Shan Ao”) and Young Crystal Ltd, both of which were controlled by Chin.  The first report rendered was dated 1 November 2013 and signed by Mr Lau Tsz Hang Stephen, the 3^rd defendant herein, who was a managing director of the Forensic Accounting and Advisory Services practice of FTI HK at the time and had carriage of the matter until October 2014 when he left FTI HK.  Sutton assumed responsibility for the matter thereafter. 

6.  On 14 July 2015, a second report was issued by FTI HK.  On 25 January 2018, the C&E updated its instructions, and asked FTI HK and Sutton to produce a revised report taking account of the latest developments. 

7.  The report (“2018 Report”) eventually tendered as evidence in the criminal trial was dated 11 July 2018 and signed by Sutton who also appeared at the trial as “PW1” to give oral evidence.  His evidence formed the main foundation of the prosecution’s case on the money laundering charge (see Reasons for Verdict of HH Judge Tam dated 26 June 2019 [2019] HKDC 866 at §§33, 42, 141).  There was another charge listed for trial, that of conspiracy to export unmanifested cargo, to which the 4^th defendant pleaded guilty, but the prosecution decided to offer no evidence on it after certain evidence was ruled inadmissible pursuant to a voir dire.  There were six defendants named in the charges.  Chin was the 1^st defendant.  The other defendants were his employees or subordinates.  The money laundering charge was raised against Chin and the 2^nd, 3^rd and 6^th defendants.

8.  The 2018 Report mainly consisted of Sutton’s analysis of the activities of 12 relevant bank accounts, the fund flows including inter‑bank transfers and the inflow and outflow of funds to and from the bank accounts, and the “potential indicators” of money laundering arising out of these activities.

9.  Chin was detained for a considerable period of time pending the trial, which began in the District Court in October 2018 and apparently took 97 days, during which he was unrepresented.  At the conclusion of the prosecution case, the trial judge, Judge Tam, ruled that there was a case to answer on the money laundering charge because (see Reasons for Verdict §§82-83), as far as Chin was concerned:

「 控方第一證人的專家報告，明顯地顯示表面上，12個主題銀行帳戶（山澳6個，晶鎰6個）有一些資金往來出現洗黑錢的徵象。第一被告人作為兩間公司的全面控制人，及有專屬的資金調動權，必然對有關資金往來有所認知。」

10.  Chin then elected to give evidence, but the 2^nd, 3^rd and 6^th defendants opted not to give evidence or call any witness.  In the end, Judge Tam held that the evidence against them was not sufficient to prove the charge beyond reasonable doubt.  He regarded Chin’s explanations and the voluminous documents he adduced as evidence showing it was possible that the fund movements were related to metal trading engaged in by the group of companies under Chin’s control.[1]  The judge found that there was no clear evidence showing the defendants knew of the pattern of fund movements in the 12 bank accounts, and that their positions and roles in the relevant companies were not sufficient in themselves to show beyond reasonable doubt that they agreed to conduct money laundering.[2]  Further, the judge stated that, even if he had wholly rejected Chin’s evidence and the documents he put forward, he could only place limited weight on Sutton’s report and related evidence, which was not sufficient to satisfy the criminal standard of proof.  The reasons include that the cash transactions could be due to the use of “underground banks” (地下錢莊); the companies were under the same control; although Shan Ao itself did not have any employee, it could have relied on staff employed by other group companies; and Sutton did not investigate other group companies and their functions.[3]

The strike-out application

11.  On this application the defendants contend that the statement of claim discloses no reasonable cause of action (for this ground no evidence is admissible), is frivolous and vexatious, and is an abuse of the process of the court, and should therefore be struck out under RHC Order 18 rule 19.

12.  There is no dispute that the power to strike out is reserved for plain and obvious cases.  The plaintiff’s claim must be obviously unsustainable, the pleadings unarguably bad and it must be impossible, not just improbable, for the claim to succeed before the court will strike it out: see Hong Kong Civil Procedure 2020, §18/19/4.

13.  The statement of claim is in parts not easy to understand but the key allegations seem to be that:

(1)  The defendants were engaged by C&E and prepared a forensic accounting report: §§10‑11.

(2)  The defendants, to their own knowledge, lacked the necessary professional qualification to enter into the engagement with C&E or to give evidence as an expert in the criminal proceedings against Chin: see paras 9, 16, 19‑20, 23, 26.

(3)  The defendants falsely claimed they had the necessary professional qualification to give evidence as an expert: paras 15, 17, 18.

(4)  The report was, to the defendants’ knowledge, false.  In order to meet the C&E’s demands, the defendants suppressed the genuine commercial transactions: see paras 21‑22.

(5)  In reliance on the defendants’ report, the C&E arrested Chin, obtained a restraint order, and prosecuted the plaintiff: see paras 12‑14, 25.

14.  As interpreted by the plaintiff’s own counsel,[4] the complaint that the defendants were not qualified to give expert evidence as they did in the criminal proceedings gives rise to a claim for breach of statutory duty.  The plaintiff’s counsel also submit that there is a case of malicious prosecution,[5] and an admittedly unpleaded cause of action in negligence.  It is convenient to take these claims in turn.

Alleged lack of professional qualification

15.  Chin’s complaint based on the defendants’ lack of professional qualification seems to me to be based on a fundamental misunderstanding of what qualifications are necessary for a person to give evidence as an expert in legal proceedings. 

16.  It is common ground that at all material times, FTI HK was not a “corporate practice” registered under s 28E of the Professional Accountants Ordinance (Cap 50) (“PAO”) and that Sutton was not a “certified public accountant (practising)” within the meaning of the PAO. 

17.  Sutton was, however, incontrovertibly a “certified public accountant” registered under s 22 of the PAO, as well as a member of the Hong Kong Institute of Certified Public Accountants (“HKICPA”), though not a “practising member”. 

18.  The fact that FTI HK was not a “corporate practice” and that Sutton was not a “certified public accountant (practising)” does not mean they are not qualified to take up the engagement entrusted by C&E or to give evidence for legal proceedings.  A “practising” qualification is necessary for an audit engagement: see ss 28A(6), 28D(11)(b)(iii), 29(2) and 42(1)(k) of the PAO, but there is nothing to suggest, whether in the pleading or in fact, that the engagement in question here was an audit.  On the contrary, it was an engagement to provide forensic accounting services.  Para 1.36 of the 2018 Report expressly stated that in compiling the report, Sutton had not conducted an independent audit or verification of the information or documents provided to him (this was specifically referred to in the Reasons for Verdict at §67(b)).  There is no requirement under the PAO that a company must be registered as a “corporate practice” or that an accountant must be a certified public accountant with a practising certificate before he can provide forensic accounting services or give evidence as an expert witness.  Nor is there any such requirement under rules of court or the law of evidence generally.  Whether a witness tendered by the prosecution or the defence to give expert opinion evidence has the necessary qualifications is a matter for the court seised with the case in question and depends, inter alia, on “whether the witness has acquired by study or experience sufficient knowledge of the subject render his opinion of value in resolving the issues before the court”: R v Bonython (1984) 38 SASR 45; HKSAR v Tsang Chiu Tik & another [1999] 3 HKLRD 301.  Provided that the court is satisfied the expert has the necessary expertise, there is no fixed and absolute requirement in law that a forensic accountancy expert witness must be a member of the HKICPA, let alone a practising member.

19.  In fact, the qualification of Sutton was the subject of debate in the criminal proceedings before the trial judge, who ruled in favour of admitting the opinion evidence.  In his Reasons for Verdict, Judge Tam stated (at §140):

「 在正式審訊的開端，第一被告人挑戰控方第一證人的專家身份。在聽過該位證人的證據後，包括盤問下的證據，本席裁定，控方第一證人可以以法[證]會計範疇的專家身份作供。」

20.  Counsel for the plaintiff also acknowledge that the Organized and Serious Crimes Ordinance (Cap 455) (“OSCO”), where the money laundering offence is found, does not contain any requirement that a forensic report produced for the purpose of prosecution of any offence under that Ordinance must be prepared or signed by a “certified public accountant (practising)”.  However, they submit that a person engaged to provide a forensic accounting report on whether a company has been involved in money laundering must possess a practising certificate, because he has to investigate if the company’s records are in agreement with its financial statements and has to be even more vigilant than a company auditor.  This contention is in my view misconceived.  A forensic accounting exercise that is not an audit does not become an audit because vigilance is needed and some investigation of the company’s books and records is required.  What the exercise calls for depends on the particular engagement, its nature and purpose and the applicable rules, as well as the facts of the case.  There is no basis whatsoever to suggest that any forensic accounting report produced for the purposes of prosecuting an offence under the OSCO must be prepared by a certified public accountant holding a practising certificate.

21.  The plaintiff’s counsel refer to other statutes which establish corporations or entities and specify that their financial statements are to be audited by a “certified public accountant (practising)” (eg the Urban Renewal Authority Ordinance (Cap 563) and the Securities and Futures Ordinance (Cap 571)).  But there is simply no such statutory requirement applicable to the present case. 

22.  Section 29(2) of the PAO provides that a person shall not hold any appointment or render any services as an auditor of a company within the meaning of the Companies Ordinance (Cap 622) or as an auditor of accounts for the purpose of any other Ordinance, unless he is the holder of a practising certificate or a corporate practice.  The plaintiff’s counsel submit that this should be interpreted to impose the requirement also on persons who carry out work “similar” to an audit.  I reject this contention as entirely baseless.  Nor do I consider FTI HK’s engagement by C&E to be analogous to an audit.

23.  Counsel also pray in aid the Estate Agents Ordinance (Cap 511) s 28 of which provides that the Estate Agents Authority may appoint one or more “certified public accountants (practising)” to conduct investigation where it believes certain requirements of the Anti‑Money Laundering and Counter‑Terrorist Financing Ordinance have not been complied with.  In my view, this simply shows that, where the Legislature considers that a practising qualification is required, it can and will say so.  This may be contrasted with the absence of such statutory requirement in the PAO or OSCO in relation to the engagement in question.

24.  Counsel’s reliance on paras 14‑16 of the Hong Kong Standard on Related Services 4400 is likewise, in my view, misconceived.  They do not begin to suggest that a forensic accounting expert called to give evidence in an OSCO case must be a certified public accountant (practising).

25.  For all these reasons, it seems to me plain that there is no basis for any claim arising from the mere fact that FTI HK and Sutton were not a corporate practice and a certified public accountant (practising) respectively.

Malicious prosecution

26.  The second cause of action that, counsel submit, is advanced in the pleading is malicious prosecution.  In the statement of claim, it is asserted:

「 詳 情

21. 在關鍵時刻被告清楚知道所述「在關鍵時刻建萊集團及其子公司可能與走私活動有關連及入帳同等HKD33億的款項顯示有洗黑錢活動的潛在跡象」是虛假的，而該HKD33億的款項是真實性商業的交易，在法官譚思樂裁決書第184段可以證明（見下述23段）。

詳 情

22. 在關鍵時刻被告是清楚知道製作虛假「法證會計報告」所述「在關鍵時刻建萊集團及其子公司可能與走私活動有關連及入帳同等HKD33億的款項顯示有洗黑錢活動的潛在跡象」提供的證詞，被告為了迎合香港海關人員的要求，而掩蓋著真實性商業的交易。第九被告在區域法院出庭作證時承認「真實性商業的交易有關信息」的存在的事實，詳見以下；

22.1 第九被告在2019年1月10日1650時出庭作證：

第一原告： 專家，關於PP-9呢個證物，我系上次追問你時候你先至,依家先向法庭披露PP9呢個證物裡面所講果的錢系貨款？

第九被告： 唔系，系你要求之下，唔系你追問之下，我一路都接受呢筆錢由中國大陸果到正當咁樣由銀行系統匯嚟香港，我亦都有解釋到如果啲資金由中國大陸果到匯到香港，如果普通資金或者資本上資金，果個分別系邊到，同埋呢啲普通資金匯款，我之前都有解釋過，是買賣貨款短期商業交易的貨款，無論點都好，睇返PP9第2頁，系呢頁右手邊最頂果到，同埋喺銀行家誓章亦都有講話果的是貨款，同埋系廣州經濟發展區咁樣嘅，所以我冇披露嘅呢樣野，應該唔系，我並冇咁樣做到。

第九被告： 我冇具體咁樣披露，記錄上系顯示系買貨付款嚟嘅。

法官： 即系話好似呢家喺PP-9上面最右手邊果個直棟呢啲嘢，系之前果的報告系冇披露到嘅？

第九被告： 系啱嘅。

第一原告： 專家，你冇披露，你的目的系想誤導法庭。

第九被告： 我一直都系接受話內地銀行系接受用來買貨款，先至將啲錢匯落來香港。

第一原告： 專家，我向你指出，如果你系報告入面有披露，可能會我們幾位被告可能不會被律政司提出檢控。

第九被告： 我估其實喺我做呢份報告時候已經起訴咗你，但唔肯定啦。」

27.  The elements of the tort of malicious prosecution have been set out in Clerk & Lindsell on Torts, 22^nd ed., §16‑12, in a passage approved by the House of Lords in Martin v Watson [1996] 1 AC 74, 80C and Gregory v Portsmouth City Council [2000] 1 AC 419 and the Court of Appeal in Eugene Hae-Hoon Oh v Kate Gaskell Richdale [2005] 4 HKC 28, §10:

“ In action of malicious prosecution the claimant must show first that he was prosecuted by the defendant, that is to say, that the law was set in motion against him on a criminal charge; secondly, that the prosecution was determined in his favour; thirdly, that it was without reasonable and probable cause; fourthly, that it was malicious. The onus of proving every one of these is on the claimant.”

28.  With reference to these requirements, there are several fundamental problems with the plaintiff’s claim.

29.  First, the party who first took action against Chin was C&E, not the defendants or any of them.  As pleaded in the statement of claim,[6] the C&E arrested Chin and searched and seized his and his companies’ documents in January 2012, long before the defendants’ initial engagement.  What is pleaded is that the defendants were engaged by the C&E to produce a forensic accounting report; that they prepared reports to “align with” the requests of the C&E (為了迎合香港海關人員的要求);[7] and that their reports led to, inter alia, the criminal prosecution of Chin.  These averments, in my view, provide no basis to regard the defendants as the relevant “prosecutor” who initiated the criminal proceedings.  FTI HK or Sutton provided a forensic accounting report at the behest of the C&E, which was later revised and adduced as evidence at the trial.  Granted that it may be said that the report was an important piece of evidence based on which the decision to prosecute was made, it does not follow that the defendants can be said to have initiated the prosecution.

30.  In Eugene Hae-Hoon Oh v Kate Gaskell Richdale [2005] 4 HKC 28 at §16, Woo VP stated the principles as follows:

“ Assuming that the defendant had lied to the prosecuting authorities as a result of which the prosecution was brought against the plaintiff, the following factors or tests, which may be overlapping, are applicable in determining whether the defendant should be held responsible for the prosecution:

(a) Whether the defendant’s lies and the circumstances of the case were such that it became virtually impossible for the prosecuting authorities to exercise any independent discretion or judgment as to whether or not to prosecute the plaintiff.

(b) Where it is shown that the prosecuting authorities were able to and did exercise an independent discretion or judgment in investigating the case and in the decision to prosecute the plaintiff, the nexus between the lies and the prosecution is broken and the defendant will not in the circumstances be held to be the prosecutor.

(c) In considering whether the nexus is broken, it is necessary to consider whether the offence alleged against the plaintiff was exclusively within the knowledge of the defendant — in a “one on one” situation, and if it was, then it becomes virtually impossible for the prosecuting authorities to exercise any independent discretion or judgment.

(d) In a more complex case, where there was other evidence apart from the defendant’s against the plaintiff, the test as to whether the nexus is broken is the same, but the circumstances will need to be examined more cautiously to see if the prosecuting authorities had conducted investigations and critically appraised the evidence before them in reaching the decision to prosecute.”

31.  See also per Le Pichon JA at §31; the decision of Ma CJHC (as he then was) in the earlier equally divided decision of the Court of Appeal in that case at [2005] 2 HKLRD 285 at §19; and the first instance decision of Deputy Judge Lam (as Lam VP then was) reported in [2003] 4 HKC 318, at §§29‑59.  The principles applied were approved by the Appeal Committee of the Court of Final Appeal: (2006) 9 HKCFAR 649.

32.  It must be shown that there was an abuse of the criminal legal process by the defendant such that it was set in motion in order to secure the wrongful conviction of the plaintiff. Giving false evidence which had influenced the relevant prosecution authority to prosecute is not enough.  It must be demonstrated that it became virtually impossible for the prosecuting authorities to exercise any independent discretion or judgment as to whether or not to prosecute.

33.  Quite plainly, giving an expert report which was eventually held insufficient to found a conviction cannot without more amount to having “set the law in motion”: Evans v London Hospital Medical College (University of London) and Others [1981] 1 WLR 184, 188‑189. 

34.  Nor do the allegations that the evidence was false and that it was adduced to “align with” the C&E’s requests turn the defendants into the prosecutor.  On the contrary, they suggest that it was the C&E that wanted to prosecute Chin and that the defendants lent themselves to the exercise by giving evidence that the C&E wanted to hear.  It was an accusation that the expert lacked independence from the C&E, not that the C&E was being dictated by the expert.  The plaintiff’s counsel assert in their submissions that it was “only with the help of FTI HK that the money laundering prosecution could get off the ground” and that the defendants “wanted to satisfy the Customs & Excise’s need to mount the prosecution”,[8] but these allegations do not seem to me, even at face value, to support a contention that the defendants were in substance the prosecutor.  There is nothing pleaded to show that the defendants acted in such a way that made it virtually impossible for the prosecuting authorities, including the Department of Justice and the DPP who presumably made or approved of the decision to prosecute, to exercise their independent judgment and discretion.  There is nothing pleaded to show that the defendants actively procured the prosecution or manipulated the prosecuting authorities into taking a course that they would not otherwise have taken: see AH v AB [2009] EWCA Civ 1092, §§47, 59, 77.

35.  The plaintiff’s counsel faintly submit that it would be arguable in “future pleas to be made” that the defendants were the agents of C&E and should be liable for the tort of malicious prosecution committed by the principal.[9]  Quite apart from the fact that this is wholly unpleaded, the legal basis for saying that an agent is liable for the tort of the principal has not been identified at all.

36.  Further, there is no plea that the prosecution was without reasonable and probable cause.  The fact that Chin was acquitted did not in itself mean that there was no basis at all to prosecute him.  After all, the judge ruled there was a case for him to answer. In Williamson v Attorney General of Trinidad and Tobago [2014] UKPC 29 at §14, Lady Hale said:

“ On the question of reasonable and probable cause, or the lack of it, a prosecutor must have ‘an honest belief in the guilt of the accused based upon a full conviction, founded upon reasonable grounds, of the existence of a state of circumstances, which, assuming them to be true, would reasonably lead any ordinarily prudent and cautious man, placed in the position of the accuser, to the conclusion that the person charged was probably guilty of the crime imputed’: Hicks v Faulkner (1878) 8 QBD 167, 171 per Hawkins J, approved by the House of Lords in Herniman v Smith [1938] AC 305, 316 per Lord Atkin. The honest belief required of the prosecutor is a belief not that the accused is guilty as a matter of certainty, but that there is a proper case to lay before the court: Glinski v McIver [1962] AC 726, 758 per Lord Denning.”

37.  Finally, there is no plea that the defendants were actuated by malice.  A good working definition of malice in this context has been said in Williamson at §11 to be this:

“ What is clear is that, to constitute malice, the dominant purpose of the prosecutor must be a purpose other than the proper invocation of the criminal law — an ‘illegitimate or oblique motive’. That improper purpose must be the sole or dominant purpose actuating the prosecutor.”

38.  Malice can, of course, sometimes be inferred, but this does not absolve a plaintiff from the need to plead malice including, where inference is relied upon, the matters from which it is alleged to be inferred.

39.  There is a plea that the defendants knew the evidence was false (§21).  This is tantamount to an allegation of fraud, which, as is well established, must be pleaded only if there is proper basis to do so, and then with the utmost particularity.  I do not think the pleading meets the stringent standard for a plea of fraud.  Nor do the plaintiff’s counsel’s submissions assist in that regard.  They criticise Sutton for not making clear in his report what issues fell outside his expertise,[10] for not referring in the 2018 Report to the bankers’ affidavit evidence of which he was aware (and which was said to contradict money laundering),[11] and for not spelling out that he did not possess expertise on the business of metal trading.[12]  These alleged shortcomings do not, however, show that Sutton did not in fact hold the opinions expressed in the 2018 Report.  If he did in fact hold those opinions, then it is unclear in what sense the report is said to be false.  As to the probative value of the report, Sutton had set out his instructions (see §1.22 & §1.26 of the 2018 Report and §46 of the Reasons for Verdict) and the limitations of the exercise and his report (see §1.34, §1.36, §§1.38‑1.40 and §2.14 of the 2018 Report and §67 of the Reasons for Verdict). What weight to place on his opinions was first a matter for the prosecution and ultimately a matter for the trial judge.

40.  For all these reasons I take the view that the claim of malicious prosecution does not get off the ground either.

Negligence

41.  Thirdly, the plaintiff’s counsel postulate that there may in future be a claim by Chin against the defendants for negligence in preparing their reports and opinion evidence.  Admittedly no such claim has been pleaded.  Nor is there any draft pleading placed before this court.  On this basis I do not think I should embark on a discussion of the law in the abstract as to whether a prosecution expert witness can be held liable in negligence to a defendant in the criminal proceedings: see eg Elguzouli Daf v Commissioner of Police of the Metropolis [1995] QB 335.

The 1^st and 10^th to 13^th defendants

42.  The above reasons are sufficient to show that the statement of claim should be struck out on the basis that it does not disclose a reasonable cause of action or is otherwise doomed to failure.  I should, however, mention that in any event, the 1^st and 10^th to 13^th defendants had no involvement at all in the preparation of any of the reports in 2013, 2015 or 2018.  The 1^st defendant is the US-listed company in the FTI group.[13]  The 10^th to 13^th defendants are said to be individuals sent by the 1^st defendant to act as directors or senior officers of FTI HK.[14]  The statement of claim does not contain any basis for alleging that they should in any way be held liable.  The plaintiff’s counsel assert that these persons had “management or otherwise direction and control of FTI HK’s activities and business” and “[p]rima facie, bear supervisory responsibilities for the making of the Report”.[15]  This bald submission is unsupported by any principle or authority and is in my view unsound.

Conclusion on strike-out and dismissal

43.  The statement of claim is wholly and indisputably bad.  No alternative pleading has been put forward.  In these circumstances, the statement of claim should be struck out, and with the pleading struck out, the action should be dismissed.

Application for restricted proceedings order

44.  In addition, the defendants apply for an order restraining Chin from commencing any legal proceedings against them in future, without leave of the court, whether in respect of the same claim or subject matter in these proceedings or otherwise, and a further order that any proceedings already instituted by Chin against the defendants shall not be continued by him without leave of the court.  This type of order has been called a “restricted proceedings order” (“RPO”) in Practice Direction 11.3. As held by the Court of Final Appeal in Ng Yat Chi v Max Share Ltd & Another (2005) 8 HKCFAR 1 and summarised in §8 of the Practice Direction, an RPO:

“ should only be made if the person to be subjected to the order has abused, and is likely to continue abusing, the Court’s process by seeking persistently to re‑litigate in fresh proceedings, without viable legal grounds, matters which have already been determined by the Court, in circumstances where an RPO would be a proportionate response.”

45.  In the present case, the defendants submit that Chin’s claim in this action is unmeritorious and misconceived; his conduct prior to issuing this action was designed to harass and vex the defendants without good reason; he has a history of conducting unmeritorious litigation, and his company Keen Lloyd Energy Ltd has been found to have engaged in conduct abusive of the court’s process; and, in this action, Chin has demonstrated a penchant for issuing unmeritorious interlocutory applications.

46.  In my judgment, the circumstances of this case do not justify an RPO.  The lack of merit in the statement of claim has led to its being struck out and the action dismissed, but is not in itself a sufficient reason for an RPO.  Chin’s conduct prior to the action, consisting of writing letters between 16 April and 24 May 2019 to the defendants which made demands before action, requested for copies of registration documents with the HKICPA and professional indemnity insurance, and asked whether the defendants’ solicitors had instructions to accept service, was not, in my view, conduct that crossed the line.  As to the conduct of Chin in previous proceedings, the cases that the defendants rely upon date back to 2001 and 2008, and in my view provide no sufficient basis for an inference that the court’s process will be abused.  As regards the interlocutory applications in this action, there have been two summonses taken out by Chin, one for the provision of Chinese translation of documents in English (on which the defendants were ordered to supply the translation of one document, and which was otherwise adjourned), and one for leave to adduce a further affirmation, which was dismissed.  Again, I do not regard these interlocutory steps as an indication that Chin would abuse the court’s process by seeking persistently to re‑litigate matters determined by the court.

47.  Paragraphs 2, 3 and 4 of the defendants’ summons are therefore dismissed.

48.  There will be an order nisi that Chin do pay the defendants two‑thirds of the costs of their summons, to be taxed if not agreed.