SUCCESS LANE DEVELOPMENT LTD v. FERGURSON HONG KONG LTD t/a NEW WORLD MILLENNIUM HONG KONG HOTEL

DCCJ 2191/2023

[2025] HKDC 17

IN THE DISTRICT COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

CIVIL ACTION NO. 2191 OF 2023

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BETWEEN

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DECISION

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I. INTRODUCTION

1.  On 31 December 2024 at 16:48, the plaintiff filed a summons to apply for an order of stay of execution of various costs orders made against the plaintiff and insisted to the Registry that the summons should be heard today, which is the very next working day immediately following 31 December 2024, 1 January 2025 being a public holiday. The summons was served on the defendant at around 17:15 that day, which means that according to Order 65 rule 7 of the Rules of the District Court, the summons is deemed to have been served today only.

2.  The various costs orders the plaintiff now seeks to stay are the orders made on:-

(1) 6 February 2024 ([2024] HKDC 44);

(2) 1 March 2024 ([2024] HKDC 25 and [2024] HKDC 336);

(3) 5 March 2024 ([2024] HKDC 342);

(4) 20 March 2024 ([2024] HKDC 452);

(5) 27 March 2024 ([2024] HKDC 509);

(6) 28 March 2024;

(7) 2 April 2024;

(8) 23 May 2024 ([2024] HKDC 792);

(9) 24 June 2024 ([2024] HKDC 1018); and

(10) 26 July 2024 ([2024] HKDC 1222).

3.  This morning, the plaintiff filed a draft amended summons which added a few more orders, namely, those dated 25 September 2023, 9 January 2024, 22 March 2024 and 18 July 2024. The plaintiff’s representative, Ms Yung Mei Chun Jessie (“Ms Yung”), rightly said that the amendments would not have any material impact on the summons. In any event, I shall consider the present application on the draft amended summons.

4.  The plaintiff applied for leave to appeal against the substantive decisions which resulted in the above orders. The Court of Appeal dismissed the applications in [2024] HKCA 839. The plaintiff also applied for leave to appeal against the orders made on 6 February 2024, 1 March 2024 and 2 April 2024. The Court of Appeal dismissed the applications in [2024] HKCA 926. The plaintiff is applying for leave to appeal against the costs order dated 5 March 2024 in CACV 303/2024, which is pending now.

5.  I have perused the bundle prepared and submitted by the plaintiff to the Court during the hearing, which largely consists of court papers already on the Court record I had read before the commencement of the hearing. I have considered the submissions (both oral and written) of both parties. I should add that I only came to have a copy of the plaintiff’s written submissions during the hearing, which Ms Yung largely repeated orally during the hearing. Further, to ensure that I would not have missed any of her submissions, I read her written submissions in detail back in chambers after the hearing. Here is my decision.

II. DCCJ 7537/2024 TO SET ASIDE DECISIONS ABOVE

6.  I shall not repeat the substantive background of the present case, which have been sufficiently detailed in the various decisions mentioned above. The plaintiff’s claim against the defendant is no longer confined in the present proceedings herein only. On 20 December 2024, the plaintiff commenced DCCJ 7537/2024 seeking relief to set aside the above substantive and costs decisions on the ground of the defendant’s failure to make full and frank disclosure to the Court of alleged illegality. The alleged illegality is:-

(1) The defendant’s carpark, where the defendant has stored the plaintiff’s belongings, is not allowed for such storage under the government lease;

(2) The defendant’s provision of the hotel room to the plaintiff for storage constitutes an offence contrary to the Hotel and Guest Accommodation Ordinance (Cap 349) (the “HGAO”), and this rendered the long-stay agreement between the plaintiff and the defendant (or the Contract defined in §1 of the statement of claim) invalid and unenforceable; and

(3) Because of the illegality, the long-stay agreement is rendered invalid and unenforceable and thus the defendant’s claim of lien on the plaintiff’s belongings is bound to fail and the basis for refusal of an order for returning the plaintiff’s belongings is gone. This is a matter that the defendant should have disclosed to the Court when applying ex parte on 18 July 2023 for a stay of the ex parte injunction obtained by the plaintiff on 12 July 2023 for returning the plaintiff’s belongings.

III. ABRIDGEMENT OF TIME OF SUMMONS

7.  Two clear days’ notice is required for a hearing of an inter-partes summons. There is less than one day’s notice for the present summons, and thus the plaintiff seeks an order to abridge time of service. The urgency alleged by the plaintiff, according to its supporting affirmation made by its director Ms Yung, is:-

(1) By letter of 23 October 2024, the defendant sent a global settlement offer to the plaintiff;

(2) On 24 October 2024, the defendant issued a statutory demand, of which the plaintiff was allegedly made aware only on 11 November 2024;

(3) By letter of 5 December 2024, the defendant threatened to present a winding-up petition unless the plaintiff would on or before 10 January 2025 pay into Court as security the amount of the costs in the costs order made against the plaintiff; and

(4) By 18 December 2024, the defendant extended the time for the plaintiff to consider the global settlement offer until close of 2 January 2025, upon the rejection or expiry of which the defendant may present a winding-up petition.

8.  Ms Yung’s affirmation does not exhibit the correspondence to her affirmation, but the correspondence is included in the bundle which as I said above, I have perused.

9.  In my view, the so-called urgency is self-induced. The defendant made the offer to settle back in October 2024, and the defendant threatened in early December 2024 to present a winding-up petition on 10 January 2025. Apparently, on 18 December 2024, the defendant brought forward the deadline to today, but the plaintiff did nothing until 31 December 2024.

10.  In the circumstances, I see no good reason at all to abridge the time. On this ground alone, I dismiss the summons.

III. SUBSTANTIVE MERITS OF THE SUMMONS

11.  For the sake of completeness, I shall also consider the substantive merits of the summons, which very much depends on the merits of the plaintiff’s claim in DCCJ 7537/2024, because the stay sought by the plaintiff is a stay pending the determination of DCCJ 7537/2024.

12.  The law in relation to illegality is set out in Monat Investment Ltd v All Person(s) in Occupation of Part of No 16 Ma Po Tsuen [2023] 2 HKLRD 1311, whereby the Court should consider the following matters in determining whether to enforce a contract or not:-

(1) the underlying purpose of the prohibition which has been transgressed;

(2) conversely any other relevant public policies which may be rendered ineffective or less effective by denial of the claim; and

(3) the possibility of overkill unless the law is applied with a due sense of proportionality.

13.  In the statement of claim in DCCJ 7537/2024 signed by Ms Yung on behalf of the plaintiff (though still not in the correct format of which I reminded the plaintiff in §10 of my decision on 27 March 2024 ([2024] HKDC 509)), the plaintiff has not pleaded any such matters at all in relation to the alleged illegality. The plaintiff has simply failed to explain why the long-stay agreement should be rendered invalid and/or unenforceable by the alleged illegality. On this alone, the plaintiff’s claim on illegality has no merits at all.

14.  In any event, in relation to the alleged illegality in the alleged breach of the government lease, according to the plaintiff, the Lands Department has already issued a warning letter to the defendant. In my view, even assuming (1) and (2) in favour of the plaintiff, for the Court to render the long-stay agreement invalid and unenforceable would be an overkill in (3) (as the alleged breach of the lease would be met with consequences to be meted out by the Lands Department as they think fit), and thus, the Court would not render the long-stay agreement invalid and unenforceable. It also follows that the defendant’s claim of lien would not be defeated by the alleged illegality.

15.  In relation to the alleged contravention of the HAGO:-

(1) I fail to see what offence or breach of licencing conditions the defendant would commit by renting out a hotel room for storage of the plaintiff’s belongings as in the present case. The best the plaintiff can show, with reference to the Court of Final Appeal’s case Tri-view Ltd and Anor v HKSAR [2006] 4 HKLRD 376 is that the HAGO was to “ensure that the premises which are used to provide sleeping accommodation to guests who meet the prescribed conditions comply with certain specified standards” (at §13). It does not mean that the defendant’s hotel rooms could not be rented out for storage purposes. Further, there is nothing to suggest that the plaintiff or its directors were prevented by the defendant from sleeping in the hotel room if they wished;

(2) In any event, assuming that the HAGO was contravened and/or the licensing conditions were breached, considering the three matters in Monat set out above, I fail to see why the long-stay agreement should be rendered invalid and/or unenforceable in the light of a probable overkill in the event of invalidity and/or unenforceability; and

(3) It follows that the defendant’s claim of lien would not be defeated by the alleged illegality.

16.  In the circumstances, I fail to see any merits of the plaintiff’s claim in DCCJ 7537/2024, and thus I fail to see any merits of the plaintiff’s summons herein.

IV. CONCLUSION

17.  I therefore dismiss the plaintiff’s summons.

V. COSTS

18.  The Court of Appeal has reminded the plaintiff twice (in [2024] HKCA 839 at §64 and [2024] HKCA 926 at §34) of the Court’s power to order costs against directors, who have at all material times been Ms Yung and her husband, Mr Cheung Moon Hoi Jeff. Under s 53(1) of the District Court Ordinance (Cap 336), the Court has “full power” to do so, and in my view, it is clear that the Court may on its own motion consider whether to exercise such power in furtherance of the underlying objectives under O 1A.

19.  For this purpose, I order that Ms Yung shall be joined to the proceedings herein under O 62 r 6(1)(a) of the Rules of District Court (Cap 336F).

20.  For the hearing under O 62 rule 6(1)(b), I make the following directions:-

(1) The defendant shall, on or before 10 January 2025, file and serve affirmation, if it would like to adduce any factual evidence in support of a costs order against Ms Yung;

(2) Ms Yung shall, on or before 7 February 2025, file and serve affirmation(s) detailing and exhibiting (as the case may be):-

(a) Whether she initiated the present summons, and if not, who of the individuals (for the avoidance of doubt, not any corporate entities) did;

(b) Whether she initiated DCCJ 7537/2024, and if not, who of the individuals (for the avoidance of doubt, not any corporate entities) did;

(c) Whether she has had the conduct and management of the present summons, and if not, who of the individuals (for the avoidance of doubt, not any corporate entities) has;

(d) Whether she has had the conduct and management of DCCJ 7537/2024, and if not, who of the individuals (for the avoidance of doubt, not any corporate entities) has;

(e) Whether she has financed the present summons, and if not, who of the individuals (for the avoidance of doubt, not any corporate entities) has;

(f) Whether she has financed DCCJ 7537/2024, and if not, who of the individuals (for the avoidance of doubt, not any corporate entities) has;

(g) The financial statements of the plaintiff for the last two years;

(h) The latest two annual returns of the plaintiff filed with the Companies Registry;

(i) Reply to the defendant’s affirmations, if any, filed and served pursuant to (1) above; and

(j) Any other matters she thinks relevant to the Court’s consideration whether or not to order costs against her personally.

(3) There shall be no further affirmation without the leave of the Court;

(4) There shall be a substantive hearing before me on 28 February 2025 at 2:30 pm with 2 hours reserved, which both Ms Yung herself (or legal representative on her personal behalf, if any) and the defendant shall attend, for the purpose of hearing whether any costs order should be made against Ms Yung[1];

(5) The defendant shall lodge and serve written submissions with list of authorities, if any, on or before 20 February 2025;

(6) Ms Yung shall lodge and serve written submissions with list of authorities, if any, on or before 25 February 2025; and

(7) Costs reserved.