Kwan Lung Wai v. Deluxe Star Investment Ltd t/a Great Time Universal (HK)

DCCJ 4613/2019

[2020] HKDC 540

IN THE DISTRICT COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

CIVIL ACTION NO. 4613 OF 2019

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DECISION

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1.This is an application of the plaintiff by summons dated 9 December 2019 for default judgment against the defendant (“the Summons”).

2.I am satisfied that by the letter of the plaintiff’s solicitors issued to the defendant dated 19 June 2020, the Summons and the relevant papers were served on the defendant at its new registered office properly on the even date.  The defendant has sufficient notice of the present hearing and opted not to be present.  There is no reason why I should not proceed with this application in its absence.

3.The plaintiff commenced this action to rescind a contract entered between the plaintiff and the defendant on 2 December 2017 at an office unit at the Star House, Tsim Sha Tsui (“the Contract”). The plaintiff also asks for refund of a sum of HK$3,000 paid pursuant to the Contract (“the Sum”). The Contract is commonly known as “Timeshare Contract”, under which the plaintiff would have the right to reserve and stay in specified hotels in Jeju, Korea (“the Hotels”), for a specific period of time upon payment of membership and administrative fees.

4.It is trite that in this kind of applications I can only look at the pleading of the plaintiff and see whether the facts which are deemed to be true are supportive of his claim for the relief.

5.The plaintiff claims that the Contract should be rescinded by reason of its unconscionability pursuant to the Unconscionable Contracts Ordinance, Cap. 458 (“the UCO”) and he has made the following allegations in his pleading in this respect.

6.First, though the Contract was written in the Chinese language, the terms and conditions thereof or the underlying arrangement thereto are misleading, difficult to comprehend and/or understand. More importantly, the terms are unconscionable in that:

(1)     the plaintiff only had the right to exercise the membership right once a year for a week per year/two years to stay in the Hotels between 2018 and 2027;

(2)     only upon further payment of certain fees that the plaintiff could choose to stay in the Hotels and/or other resorts once a year for a week per year/two years between 2027 and 2039;

(3)     the amounts of such fees were however not specified in the Contract;

(4)     reservations of the Hotels were not guaranteed unless they were made 2 years in advance; and

(5)     the right to cancel the Contract within the 3-day cooling off period was conditional upon a payment of 30% of the membership fee as administration fee.

7.Second, the defendant’s tactic in asking the plaintiff to redeem a gift voucher upon the conditions of attending a so-called 90 minutes talk, which turned out to be a 4 to 5 hours’ sales talk, was dubious. After the talk, the Contract was signed.

8.Third, the staff was pushy and forceful during the sales talk.

9.Fourth, the staff did not explain or sufficiently explain all the relevant terms and conditions of the Contract to the plaintiff before his signing the same.

10.Fifth, the staff did not provide the plaintiff with sufficient time to review the Contract before appending his signature onto the same.

11.Sixth, the defendant knew that the plaintiff did not have sufficient or any time to review the Contract and nor the Contract was fully explained to the plaintiff.

12.Seventh, the plaintiff was not given the opportunity to seek independent legal advice or the opinion from the others.

13.Eighth, the staff requested the plaintiff to take an instant photo and complete a questionnaire, with specific instructions to the plaintiff to answer the questions therein positively.  It was an attempt to disguise the unfair sales tactic as pleaded hereinabove.

14.Lastly, it is alleged that the plaintiff executed the contract under the undue influence and/or duress asserted by the staff of the defendant for the reasons given above.

15.The plaintiff makes another plea of undue influence and duress to avoid the Contract. Under the particulars of undue influence and duress, it is further pleaded that the plaintiff was prevented to use the washroom when required and also that the plaintiff’s shoulder was pressed by a male staff against his will so that he remained seated throughout until he signed the Contract.

16.In light of these allegations, which should be accepted as truth for present purposes, I am of the view that the plaintiff signed the Contract under the undue influence and duress on the part of the defendant. In addition, I am satisfied that the foregoing allegations and in particular the terms contained therein render the Contract unconscionable within the meaning of section 5 of the UCO.

17.I, therefore, conclude that the plaintiff’s claim for a declaration that the Contract is terminated or rescinded and his claim for refund of the Sum are made out.

18.I believe a declaration is necessary to do full justice in the present case so that the plaintiff can avoid the Contract altogether without further ado. The defendant can no longer press the plaintiff for further payment or performance of his obligations under the Contract. I note that despite its written confirmation to the Consumer Council that the Contract had been cancelled, the defendant has continued to enforce the payment obligations even by debt collection agents.

19.In the premises, I grant the relief claimed in the Summons and enter judgment in favour of the plaintiff against the defendant. I also allow interest to accrue on the Sum at judgment rate from 27 August 2019 until payment.

20.Costs of this action must be borne by the defendant, to be paid forthwith, to be taxed if not agreed, with certificate for counsel.

Mr Bryan Lee, instructed by Fairbairn Catley Low & Kong, for the plaintiff

The defendant was not represented and did not appear