Mtm Lab Japan Ltd and Others v. Abacus Ltd and Another

DCCJ 1991/2022

[2022] HKDC 917

IN THE DISTRICT COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

CIVIL ACTION NO. 1991 OF 2022

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Before:  His Honour Judge MK Liu in Chambers (Open to Public) (Remote Hearing)

Date of Hearing:  30 August 2022

Date of Decision:  30 August 2022

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DECISION

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1.By an inter partes summons dated 2 June 2022 (“the Summons”), the 1^st, the 2^nd and the 3^rd plaintiffs (“P1”, “P2” and “P3” respectively, and “Ps” collectively) apply for an interlocutory injunction against the 1^st and the 2^nd defendants (“D1” and “D2” respectively, and collectively “Ds”) to restrain them from, directly or indirectly, causing harassment and intimidation to Ps.

2.The Summons was first heard on 6 June 2022.  In that hearing, I gave directions for the disposal of the Summons.  In the same hearing, each of Ds has offered an undertaking (“the Undertaking”) that they would not carry out the acts specified in the Undertakings until the disposal of the Summons or a further order made by this court, and Ps have offered an undertaking as to damages in return.  By the Undertaking, Ds have undertaken that they would not carry out the following acts before the determination of the Summons:

(1)  causing, authorizing or permitting harassment, nuisance or intimidation to:

(a)  P2 and P3, and their family members[1]; and

(b)  the staff members, directors, officers, employees, and the business associates of P1;

(2)  causing or permitting trespass to the properties belonging to P1 and/or P2 and/or P3; and

(3)  approaching or contacting Ps, the said family members, or the said associated persons, whether directly or indirectly, whether by telephone or email or otherwise.

3.The Summons is opposed by Ds.  This is the substantive hearing of the Summons.  In this hearing, Ps are represented by their solicitor Mr Elden Lai. Ds are represented by Mr Jackson Poon of counsel. 

BACKGROUND

4.P1 is a limited company which carries on business of operating beauty treatment centres and the retail of skincare and personal care products.  P2 and P3 are a married couple and are both directors of P1.

5.D1 is a limited company which carries on business as an interior decorating contractor.  D2 is the sole director and shareholder of D1.

6.From about 2008 to mid-2019, P1 had been contracting interior decoration and maintenance works to D1 on a case-by-case basis.  In mid-2019, a dispute occurred between Ps and Ds.  D1 alleged that P1 and P2 owed around HK$6 million to D1.  The dispute could not be resolved by negotiation.  D1 commenced HCA 1459/2020 (“the HC Action”) against P1 and P2 in September 2021.

7.In January 2022, P2 successfully struck out D1’s claim in the HC Action.

8.Ps’ case in these proceedings is that since 19 May 2022, Ds through their agents started to perpetrate a series of harassing and intimidating conduct against Ps (“the Harassing Acts”).  The Harassing Acts include repeated and incessant phone calls to P1’s office and shops, and to P2’s and P3’s personal mobile phones.  The Harassing Acts escalated over time when Ps refused to yield to Ds’ demands, including sending letters containing obnoxious materials like dead cockroaches and threatening messages to P1’s shops and P2’s and P3’s residence.  The purpose of the Harassing Acts is to put pressure on Ps to compel Ps to repay some alleged debts.

9.Ds’ case is that they have no involvement in the Harassing Acts alleged by Ps at all.

THE PRINCIPLES

The principles concerning interlocutory injunctions

10.The general principles concerning interlocutory injunctions are trite.  A useful summary of those principles can be found in Wah Nam Holdings Co Ltd v Excel Noble Development Ltd^[2]:-

(1)  whether there is a serious question to be tried;

(2)  if so, whether, if the plaintiff were to succeed in obtaining a permanent injunction at trial, it could adequately be compensated by an award of damages in respect of any loss which it might suffer by reason of the defendant continuing to act unrestrained pending the trial;

(3)  if not, whether the defendant would be adequately protected by the plaintiff’s cross-undertaking in damages should it be later found that the plaintiff should not have been granted an interlocutory injunction; and

(4)  if there is doubt as to the adequacy of the respective remedies of damages, where the balance of convenience lies.

11.It is trite that “a serious question to be tried” is not a very steep hurdle.  All that has to be shown is that the claimant has prospects of success which in substance and reality exist, and odds against success do not defeat him.  As long as there is a serious question, it matters not whether the court thinks that the chances of success at trial is 90% or 20%^[3]. If the opposing party seeks to show that there is no serious issue to be tried, the threshold is high, as it would be necessary to demonstrate that the claim should be struck out^[4].

Tort of harassment

12.The principles on the tort of harassment have been recently summarised by Coleman J in X and another v Z [5], in which the learned judge said:

“13. Unlike, for example, in the United Kingdom, there is no statutory provision in Hong Kong creating the tort of harassment. But even in the UK legislation, there is no definition of harassment. Rather, harassment is an ordinary English word with a well understood meaning. In Hong Kong, the tort of harassment was summarised in Secretary for Justice v Persons Unlawfully and Wilfully Conducting etc [2019] 5 HKLRD 500 at §22, drawing on Lau Tat Wai v Yip Lai Kuen Joey [2013] 2 HKLRD 1197 at §§62-69.

14. The tort of harassment relates ordinarily to a course of conduct by a person by words or action directly or through third parties, sufficiently repetitive in nature that any person ought reasonably to know would cause worry, emotional distress or annoyance to another person. The requirement that there be a course of conduct identifies that the conduct must have occurred on at least two occasions in relation to the person allegedly harassed. But whatever is the number of occasions must, in the circumstances, be sufficiently repetitive in nature to trigger the tort. The conduct must be overt, that is deliberate.

15. The applicable test as to whether or not there has been harassment is an objective test, applied to the particular circumstances of the case. Context is important. The court’s assessment includes whether the conduct has crossed the boundary from the regrettable to the unacceptable, or from the unattractive to the oppressive. The mental element required is being reckless as to whether the victim would suffer injury from the conduct.

16. Damage to the victim is necessary to constitute the complete tort. Harassment can result in a range of reactions, extending from physical injury at one end of the scale to mere humiliation at the other. The correct balance has to be struck in the particular circumstances. Anxiety is capable of constituting damage, and financial loss would also be recoverable.” (Emphasis added)

13.Regarding damage to the victim, anxiety would suffice, and the defendant must take the victim as he finds him.  Financial loss would also constitute damage to the victim.[6]

14.Prior to X v Z cited above, there has been some doubt as to whether or not the tort of harassment exists in Hong Kong.[7] However, as shown in X v Z, the most recent authorities suggest that the tort of harassment do exist in Hong Kong.  In any event, for the purpose of obtaining an interlocutory injunction, Ps would only need to show a serious question to be tried.  At the very least, the existence of such a tort in Hong Kong is a serious question to be tried.

15.I am also aware that for a corporate plaintiff, there is some dicta suggesting that a corporate plaintiff cannot sue for the tort of harassment.[8] However, P1 is not the only plaintiff in this case.  P2 and P3, who are individual plaintiffs, are also seeking the injunction as set out in the Summons against Ds.

Tort of intimidation

16.In X v Z, Coleman J explained the tort of intimidation as follows:-

“24. The tort of intimidation was also considered in Lau Tat Wai v Yip Lai Kuen Joey [2013] 2 HKLRD 1197 at §43. The three main elements are that there is (1) an unlawful threat; (2) the intention to cause harm to the claimant with that threat; and (3) damage to the claimant.

25. But the essence of the tort is coercion: see, Clerk & Lindsell on Torts (22nd Ed) at §24-61. The threat, for the purposes of the tort of intimidation, is something which puts pressure on the person to whom it is addressed to take a particular course of action. The threat must be of the “or else” kind. It must be capable of being effective to produce the desired result, and be more than idle abuse, something to be taken seriously. A warning which does not seek to have the recipient of the warning change his plans is not a threat.

26. The concept is not limited to express threats. There may be acts from which a threat can be implied. It has also been recognised that there may be some overlap between the tort of intimidation and the tort of harassment. But a threat is lawful as long as a defendant only threatens to do what he has a legal right to do. The logic is that it would be absurd to make a person liable for threatening to do something, but not for actually doing it. Much may, therefore, turn on what is meant by “unlawful” or “what you have no legal right to do” in this context. A threat to commit a tort is a threat to use unlawful means.

27. A claimant is entitled to quia timet relief to stop threats being made against him, where intimidation is demonstrated. In seeking such an injunction, the applicant must rely on past acts to show likely future conduct. The previous acts must be of the particular nature of conduct which is sought to be restrained.” (Emphasis added)

17.Damage is a necessary ingredient of the tort.  Loss may be suffered by the mere infliction of a threat and an act of intimidation may be actionable regardless whether the claimant yielded to the demand.[9]

DISCUSSION

The parties’ respective positions

18.Ps’ position is that there is a serious question to be tried, and the balance of convenience is in favour of granting the injunction sought by Ps or an injunction in similar terms. 

19.Ds oppose Ps’ application.  Ds’ position is that they have no involvement at all in the Harassing Acts.  Ds contend that there is no serious question to be tried.  Ds also argue that Ps have failed to make full and frank disclosure in this application.  Ds further argue that the balance of convenience is in favour of refusing the injunction application, and the injunction sought by Ps is unnecessary. 

Serious question to be tried

20.Ps have filed evidence, in which the details of the Harassing Acts have been set out.  It would not be necessary to set out all the details of the Harassing Acts in this decision. 

21.As to whether Ds are the perpetrators of the Harassing Acts, Ps have adduced evidence to show that in two of the many harassing telephone calls made to P1’s office, the callers expressly identified themselves as representing D1. The two telephone calls were picked up by P2’s secretary Ms Carrie Ngai, and P2 has given evidence concerning these two telephone calls in his 1^st Affirmation filed in support of the Summons.

22.Mr Lai also submits that the following matters would be relevant in assessing whether there is a serious question to be tried:

(1)  There is a pre-existing and on-going dispute between the parties.

(2)  In his first Affirmation, P2 has mentioned that prior to the commencement of the HC Action, D2 had approached him on several occasions to demand for payment of the HK$6 million.  When P2 refused, D2 indicated that he would leave the matter to debt collecting agents.

(3)  In his first Affirmation, P2 has also mentioned that D2 knows both P2 and P3 personally, and D2 is privy to some of the personal information of P2 and P3, for example, their private mobile phone numbers, residential address, and the chronic medical condition of P3.

(4)  The Harassing Acts only occurred after D1’s claim against P2 has been struck out in the HC Action.

(5)  Further, the Harassing Acts stop entirely after Ds have offered the Undertaking to this court.

(6)  D2 is the sole director and shareholder of D1.  For the purpose of the Summons, it is arguable that D2 is the alter ego of D1.

23.Mr Poon submits that:

(1)  Apart from some inadmissible hearsay evidence, there is simply no admissible evidence showing that either or both Ds have any involvement in the alleged Harassing Acts.  There is no evidence showing that there is a serious question to be tried.

(2)  Ps have not been harassed by Ds.  Ps may be harassed by some other persons.

24.With respect, I am unable to agree with Mr Poon that there is no serious question to be tried.

(1)  As to whether the Harassing Acts were carried out by Ds or their agents, this is a matter to be determined in the trial and not a matter to be determined in this application.  For the purpose of the Summons, Ps would only need to show that whether Ds have any involvement in the Harassing Acts is a serious question to be tried.  One must bear in mind that a serious question to be tried is not a very steep hurdle.

(2)  The matters set out in [22] above are either matters within P2’s personal knowledge or matters not in dispute.  In my view, none of these matters can be said as based upon inadmissible hearsay evidence.  With these matters in mind, in my judgment, whether Ds have any involvement in the Harassing Acts is a serious question to be tried.  This is the conclusion reached by me even if I put aside the two telephone calls mentioned in [21] above.

(3)  As to the two telephone calls mentioned in [21] above, reading P2’s 1^st Affirmation in context, P2 must have been informed by Ms Carrie Ngai regarding these two telephone calls.  An affidavit or affirmation sworn for the purpose of being used in interlocutory proceedings may contain statements of information or belief with the sources and grounds thereof.[10]  I do not see any ground upon which it can be said that the evidence concerning these two telephone calls is inadmissible evidence.  These two telephone calls reinforce the conclusion that whether Ds have any involvement in the Harassing Acts is a serious question to be tried.  However, as said in the above, even if I put aside these two telephone calls, the conclusion that there is a serious question to be tried would remain unchanged.

25.In my judgment, there is a serious question to be tried between Ps and Ds.  In saying so, I am of the view that while P1 may not sue Ds by relying upon the tort of harassment, P1 may still rely upon the tort of intimidation in pursuing its claims against Ds. 

Full and frank disclosure

26.Mr Poon submits that Ps have failed to discharge their duty of making full and frank disclosure by failing to reveal their poor financial situation to the court in this application.  Mr Poon argues that Ps have failed to draw the following to the court’s attention:

(1)  In or about July 2021, there were bailiffs attending one of P1’s shops in Tsim Sha Tsui since that shop had failed to pay rent to the landlord.

(2)  Some of P1’s employees were forced to take no pay leave.  This is revealed by an ex-employee of P1 in the blog post written by him or her.

(3)  P1 is unable to pay decoration fees of around HK$6 million to D1.

27.With respect to Mr Poon, Ps’ application by the Summons is an inter partes application.  Both Ps and Ds have been given opportunities to file evidence before this substantive hearing, and both parties have the opportunities to make submissions in this hearing.  The concept of full and frank disclosure is a concept in an ex parte application.  In an ex parte application, since the court would only have evidence and submissions from one side, the applicant would have the duty of making full and frank disclosure, drawing the evidence and the points which are not in favour of the applicant to the court’s attention.  It is not correct to say that an applicant in an inter partes hearing has a duty of making full and frank disclosure.

28.Mr Poon in fact is saying that Ps may not have the ability to honour the undertaking as to damages offered to the court.  If there is any substance in this point, what the court would do is not refusing the injunction application, but would be requiring Ps to fortify their undertaking as to damages.

29.The principles concerning fortification have recently been summarized by K Yeung J in Yan Yu Ying v Leung Wing Hei[11]. In that case, the learned judge said:

“81. Not all cross-undertakings as to damages are required as a rule to be fortified. Fortification is not the necessary starting point. Mr Man accepts that. As has been usefully summarised by AnthonyTo J in Sun Yan v Superb Jade Ltd (HCA 813/2014, [2015] HKEC 2208, 23 October 2015) at [11], and recently applied by Deputy Judge Douglas Lam SC in Banco De Chile v Yong Ming Tai Technology Trade Co Ltd [2019] 1 HKLRD 1290 at [15], that:

‘The legal principles applicable to fortification are well settled. The court has a general power to order fortification where it appears just and proper to protect the defendant by making such an order (Chow Chor Leung v Rafaella Sportswear Inc [1990] 1 HKLR 449 at

p.453H). Usually, merit of the parties’ case is not a necessary consideration. However, if the plaintiff has a strong case, it may not appear just and proper to make the protection available to the defendant. The burden of showing the need for fortification and the appropriate quantum falls on the defendant seeking fortification (Hui Chi Ming v Koon Wing Yee [2011] 1 HKLRD 260, at [45]). He must show the likelihood of a significant loss arising as a result of the injunction, and demonstrate why he believes the plaintiff will be unable to make good that loss (Chatwani v Bhimji (No 2) [1992] BCLC 387, at 404). The court will approach these issues by taking a broad view of the evidence, usually without the need of a detailed enquiry. Whilst there is no obligation on the plaintiff to give full and frank disclosure of his own financial means, circumstances might arise where the absence of financial disclosure by a plaintiff might entitle adverse inference as to his ability to meet his cross-undertaking in damages to be drawn (Hui Chi Ming at [45]).’

82. Whilst fortification is not the necessary starting point, and whilst noting Wah Nam[12] is a case on material non-disclosure of the plaintiff ’s financial position in the context of the adequacy of its undertaking as to damages, I am of the view that the approach suggested by Ribeiro J in Wah Nam at p.129C–D is equally valid when deciding whether it is just and proper to order fortification. The approach is whether a plaintiff ’s financial position is such that, viewed fairly, may be said to raise realistic doubts as to the plaintiff ’s ability to honour the cross-undertaking.

83. In that same context, the absence of financial disclosure by a plaintiff might also entitle adverse inference as to his ability to meet his cross-undertaking to be drawn — see Banco De Chile above.”

30.As to Ps’ financial abilities, P2 said the following in his 3^rd Affirmation:

(1)  In or around July 2021, one of P1’s shops in Tsim Sha Tsui had failed to pay rent not because of P1 having financial difficulties, but due to the oversight of P1’s accounting staff.  All outstanding arrears of rent have been fully settled, and that is an isolated and single incident.  There has not been any similar incident ever since.

(2)  P1 has never forced its employees to take no pay leave.  D2 have not produced the alleged blog post to substantiate his allegation.

(3)  The residence of P2 and P3 is a property (“the Property”) in P3’s sole name.  The net worth (i.e.  after deducting the amount of loan secured by the mortgage over the Property from the market value of the property) of the Property is in the region of nearly HK$38 million.

31.With respect, it is plain and obvious that there is no reason to require Ps to fortify their undertaking as to damages in this application.  Ds have not adduced any evidence showing that they would suffer significant loss if the injunction sought by Ps or an injunction in similar terms is made.  Further, there is no evidence refuting the matters mentioned by P2 as set out in [30(1)] and [30(3)] above.  As to the alleged indebtedness of around HK$6 million owed by P1 to D1, this is a matter in dispute in the HC Action, and there is not yet any judgment in the HC Action.  In any event, P2 and P3 are having a valuable asset, i.e. the Property, the net worth of which is around HK$38 million.  In my judgment, there is no reason to doubt that Ps would not have the ability to honour the undertaking as to damages if Ps are called upon to do so.

Balance of convenience

32.Mr Poon submits that the scope of the injunction sought by Ps by the Summons is too wide, and that injunction would unjustifiably affect the operation of D1 and the daily life of D2.  Mr Lai submits that Ps would be content in having an injunction only containing the terms of the Undertaking.

33.Having considered the evidence before me, I am of the view that the balance of convenience is in favour of granting an interlocutory injunction containing only the terms of the Undertaking to Ps.

(1)  If there is no such interlocutory injunction and Ps succeed in the trial, the damage suffered by Ps (disruption caused to P1’s operation and business, mental pressure put on P2 and P3 and their family members) could not be adequately compensated by an award of damages in respect of any loss which they might suffer by reason of Ds continuing to act unrestrained pending the trial. 

(2)  On the other hand, what Ds have promised not to do in the Undertaking would be something which Ds should not and could not do in any way.

(3)  Even if I were wrong on the point made in subparagraph (2) above, I am of the view that Ds would be adequately protected by Ps’ cross-undertaking in damages should it be later found that Ps should not have been granted the interlocutory injunction.

Injunction unnecessary?

34.After Ds offering the Undertaking to the court on 6 June 2022, according to Ps, there has not been any further harassing act.   Mr Poon submits that in view of this, there would be no need for the court to make an injunction.

35.With respect, the fact that there is no further harassing act after 6 June 2022 in fact shows that it is really necessary to have an injunction in place after the determination of the Summons until the conclusion of the trial or a further order made by this court.  The Harassing Acts only stop after Ds offering the Undertaking to this court on 6 June 2022.  The Undertaking offered is up to the disposal of the Summons only.  Ds are opposing the Summons.  In the circumstances, it is bizarre to say that it would not be necessary for this court to make an interlocutory injunction pending trial after the determination of the Summons.

DISPOSITION

36.For the reasons above, Ps’ application must be allowed.  The Undertaking is replaced by an interlocutory injunction containing the same terms.  Ps’ cross-undertaking in damages should also be recorded in the injunction.  The injunction would be effective up to the conclusion of the trial or a further order made by the court. 

37.Ds have vigorously opposed the Summons but failed.  Costs should follow the event.  I order that costs of the Summons (including costs reserved) be paid by Ds to Ps forthwith, and those costs be summarily assessed at HK$120,000.

38.I thank Mr Lai and Mr Poon for the assistance provided to the court.

Mr Elden Lai of Lily Fenn & Partners, for the 1^st to 3^rd plaintiffs 

Mr Jackson Poon, instructed by S. H. Chan & Co., for the 1^st and 2^nd defendants