Koo Ming Kown v. Pacific Online Ltd

HCA 2333/2016

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

HIGH COURT ACTION NO 2333 OF 2016

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D E C I S I O N

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The applications

1.There are 2 summonses before this Court:

1.1   The Defendant’s Summons (“D’s Summons”) to strike out the Statement of Claim and to dismiss the present action.

1.2   The Plaintiff’s Summons (“P’s Summons”) to adjourn D’s Summons on the ground that P will amend his Statement of Claim to add an additional Defendant and to seek discovery against him.

2.The plaintiff acts in person.  The defendant is legally represented.[1]

The background

3.P’s claim in this action is for an order that D terminate the appointment of Mr Chan Chi Mong Hopkins (“Mr Chan”) as its Independent Non-Executive Director and member of Audit Committee and Remuneration Committee (“the Appointments”) on the basis that he is not a fit and proper person for the Appointments.

4.D is a company incorporated in the Cayman Islands whose shares are listed on the Main Board of the Hong Kong Stock Exchange (stock code: 543).  Its principal activity is the provision of internet advertising services.[2]

5.There is no dispute that P is not a shareholder of D and has no business dealings with or interests in it.[3]  More specifically, P’s solicitors acknowledged in a letter dated 17 November 2016 that he is not an investor in D.[4] However, P asserted in his affirmation that he is “one of the prospective investors of the Defendant”.[5]

6.This begs the question the legal basis on which P makes his claim against D.

7.P has not set out the legal basis in the Statement of Claim.  This morning, I ask P specifically the legal basis on which he claims against D.  He is unable to refer me to the relevant law, save to say that he has the legal principles.

8.P’s previous solicitor has taken out a summons asking for an adjournment of this application so that P may amend his Statement of Claim.

The relevant legal principles for striking out

9.The relevant legal principles for striking out are trite:

a.   “The claim must be obviously unsustainable, the pleadings unarguably bad and that it be impossible, not just improbable, for the case to succeed before a court will strike out.  If the court does not think the matter to be clear beyond doubt or if it fails to be satisfied that there is no reasonable cause of action or that the proceedings are frivolous or vexatious, then, there should be no striking out.” as was said by the Court of Appeal in Ha Francesca v Tsai Kut Kan (No.1) [1982] 1 HKC 382 at 392.

b.   Fok JA (as he then was) in The New China Hong Kong Group Ltd (In creditors’ voluntary liquidation) & Another v Ng Kwai Kai Kenneth & Others (unrep. HCA 519/2010, Fok JA (as he then was), sitting as an additional judge of the CFI in chambers, 11 February 2011) said at §40: “Although that case (Ha Francesca case) was decided before the implementation of the Civil Justice Reform, in my view, the passage cited remains fully applicable to an application to strike out.”

c.   The Court of Appeal in Patriarch Partners Media Holdings LLC v Wong Siu Wa Sammy & Another (unrep. CACV 248/2014, Poon J. (as he than was) 22 May 2015 with others concurred) held that if the defective Amended Statement of Claim could be amended to savage the deficiency, the Amended Statement of Claim should not be struck out and the claim dismissed. [16-17] The plaintiff should produce a draft or proposed Re-Amended Statement of Claim to the judge at the time of the hearing.

10.There is no draft amended Statement of Claim from P for this Court’s consideration.

Discussion

11.P has submitted his written submissions in support of his argument against the striking out application and in support of his application for adjournment for amendment of his pleadings.

12.Having considered P’s written submissions, it is apparent that what D said that P had no locus to institute the claim is the main issue for this Court.

13.The Court of Appeal in 佛山市宏達發展公司清算組v East Legend Investment Ltd [2009] 1 HKLRD 169 §18 had ruled:

“ 1) The challenge cannot be raised by way of defence.

2) It must be raised at the outset or when it comes to the attention of the court or of the defence in the course of the proceedings.

3) Once the issue has been raised it must be decided.

4) It would be wrong to allow the action to go on without deciding the issue of standing: this is because the defendant will not have a further chance to challenge the issue.

5)   Once it is clear that the action was improperly constituted it must be brought to an end either by way of dismissal, striking out or stay.”

14.P asserts that he is a potential investor in D and, as such, he has the right make inquiry into its director’s qualification and integrity and even demand D to dismiss its director.  He relies upon the regulations of the Hong Kong Stock Exchange, which has the public duty to regulate the conducts of its members.

15.It appears that there is no relationship between P and D, not even in torts.  P is unable to demonstrate to me his relationship with D and what damage he has suffered as a result of his allegations.  In fact, he says that he has not suffered any damage.

16.As P has not put forth any draft amended Statement of Claim, I have nothing to consider.  But I simply cannot see any possibility of improving the existing Statement of Claim to save the existing one.

17.As such, this is a clear case where P does not have the locus standi to institute this action against D.  The action should be dismissed with indemnity costs to D.  So I order.

18.For the same reasons, P’s application for an adjournment of D’s application is dismissed too.

19.On the question of costs for the applications and for today’s hearing, P has no dispute that the costs should follow the event.  The costs should be assessed summarily.  P will leave this matter to this Court.  On an indemnity basis and on a broad brush basis, the costs for the applications (with counsel’s certificate for today), including the costs for the hearing this morning shall be assessed under O.62, r.9A, RHC.  I shall reduce the costs on the statement of costs the following items: the time on attendance, perusal of P’s affirmation and counsel’s fee.  The assessed costs are $180,000, to be paid by P to D within 14 days from the date hereof.

The Plaintiff appeared in person

Mr Anthony Chan, instructed by Li & Partners, for the Defendant