Chan Tun Hau v. Sze Yan Yan Aileen and Another

HCA 2240/2024

[2026] HKCFI 2052

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

ACTION NO 2240 OF 2024

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BETWEEN

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D E C I S I O N

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1.On 4 July 2025 Master Michael Lok made an order that the Amended Statement of Claim (“ASOC”)  be struck out on the ground that it discloses no reasonable cause of action against the 1^st Defendant and the Plaintiff’s action as against the 1^st Defendant be dismissed. The Plaintiff has appealed.

2.The strike-out application was made on two grounds.  First, that the ASOC discloses no reasonable cause of action.  Second, that the proceedings are frivolous and vexatious.  It is uncontroversial that the proceedings should only be struck out if I am satisfied that the claim is plainly unsustainable and that in respect of the first ground the question is to be determined by reference only to the contents of the pleading.

3.For the purposes of the first ground the relevant part of the claim made by the Plaintiff against the 1^st Defendant in the ASOC is as follows:

“1. The Plaintiff is a businessman carrying on trading and guesthouse businesses in Hong Kong.

2. The Plaintiff came to to know the 1^st Defendant in around 2009. Since around 2016, the 1^st Defendant had been working as the Plaintiff’s personal assistant and attending to the Plaintiff’s guesthouse business.

3. In around August 2018, the 1^st Defendant introduced a Chinese male by the name ‘Tai King (大金)’ whose surname is Yau (‘Tai King’) to the Plaintiff, and, without reasonable grounds for believing them to be true, negligently represented that:

(1)  Tai King was a very successful businessman with substantial investments in finance and real properties in Shanghai and Jinjiang, Fujian;

(2)  Tai King was also the owner of the 2^nd Defendant, a crypto currency issuer/trader which had an established history of issuing and trading in crypto currency;

(3)  The 2^nd Defendant was the issuer of a crypton currency called BAC, which had increased in value enormously within a short period from its date of issue;

(4)  The 2^nd Defendant was about to launch a new crypto currency called GPC (‘GPC’). The initial offering price of GPC was RMB2.50 per unit but the 1^st Defendant was able to make use of her personal connection with Tai King to nominate the Plaintiff as a cornerstone investor and procure early allotment of GPC to him at the price of RMB1.50 per unit.

(4A)  The 1^st Defendant was certain that both Tai King and the 2^nd Defendant were of sound financial standing as she had worked closely with Tai King and overseen the finance of Tai King’s business in Hong Kong.

(5)  The above representations are collectively referred to as (‘the Representations’).

4.  In reliance on the Representations, the Plaintiff among with a Mr. Sze Chun Hung, entered into a subscription agreement with the 2^nd Defendant dated 12 November 2018 by which the Plaintiff agreed to commit himself to purchase HKD11,400,000 worth of GPC at the unit price of RMB1.50 (‘the Subscription Agreement’).”

4.The Plaintiff pleads that the 1^st Defendant made negligent misrepresentations, which later in the pleading it is alleged caused loss.  I will return to the question of loss later.  To succeed in a claim for negligent misrepresentation it is necessary for the Plaintiff to prove that the 1^st Defendant owed the Plaintiff a duty of care, which she breached and that the breach caused loss.  The 1^st Defendant argues that the ASOC is demurrable, becuase it fails to plead facts or matters capable of giving rise to a duty of care.

5.On its face the ASOC does not expressly plead a duty of care. The Plaintiff contends that, however, the facts and matters pleaded in [3] can give rise to a duty of care.  The Plaintiff reasons as follows.  In Caparo Industries PLC v Dickman & Others[1] the House of Lords consider the components of a situation that can give rise to a duty of care not to make a negligent misstatement that causes economic loss.  Lord Bridge at 618A-B emphasises that it will involve a relationship of sufficient “proximity” or “neighbourhood”, that the court considers it just, fair and reasonable to impose a duty.  As Lord Bridge explains at 619B commonly the necessary proximity will arise by virtue of a person exercising his profession.  An obvious example would be a lawyer giving legal advice.  The Plaintiff also referred me to Lord Oliver’s judgment in which his Lordship says at 633C-D that it is difficult to identify a common denominator in the cases in which a duty of care to avoid causing economic loss has been found.  However, suggests Lord Oliver, the language used to describe such situations are different ways of saying essentially the same thing, namely, that the circumstances were such as to establish the necessary proximity for a duty of care to arise.  The Plaintiff emphasises that Lord Oliver expressly envisages cases in which “the degree of foreseeability is such that it is from that alone that the requisite proximity can be deduced”.  The Plaintiff says that if a statement involves factual assertions and is sufficiently clear and earnest the statement alone may be sufficient to give rise to a duly of case to ensure the statement are accurate, and this is such a case.  I disagree.  Regard must always be had to the surrounding circumstances.  It is, for example, difficult to envisage a situation in which a person known to have no legal training could be under a duty of care for a negligent misstatement of legal advice because of the language and demeanour of the person when making the misstatement.

6.The Plaintiff argued that there is also a difference between a statement in the nature of advice or opinion and a statement of fact.  It may be, so the Plaintiff reasons, that a person who is not known to have relevant expertise cannot fairly be held to have a duty of care in respect of opinions. However, if the statements are of facts, which are capable of understanding and confirmation regardless of training or expertise the situation is different. Again, I disagree.  The fact that the statements and representations can be characterised as statements of fact does not alter the need to consider the context and whether in making them the representor is to be treated as taking upon themselves a duty to ensure that they were accurate.

7.In the present case it is pleaded that the 1^st Defendant was the Plaintiff’s personal assistant and “attending to the Plaintiff’s guesthouse business”.  It is correct that [3(1), (2), (3), (4), (4A)] contains statements of fact, but plainly they do not relate to the Plaintiff’s guesthouse business.  It is not pleaded that they relate in any way to the 1^st Defendant’s work.  They relate to the provenance of an investor and a proposed cryptocurrency.  There is nothing in the ASOC to suggest that the Plaintiff had any reason to think the 1^st Defendant was capable of understanding any of the matters, which he pleads she stated or that he had any sensible reason for assuming he could rely on what she said without checking.  Plainly it was, to be charitable, ill-advised for the Plaintiff to rely on such statements without at least asking for documents to confirm them.  What is pleaded even if proved at trial in my view plainly falls short of constituting facts and matters from which a court could properly conclude that the situation justified imposing upon the 1^st Defendant the requisite duty of care.  In my view the ASOC and the Action were properly struck out on this ground.

8.As I explained at the outset there is another ground on which the Action is attacked.  The 1^st Defendant filed a short affirmation in support of her application that the Action be struck out on the grounds that it is frivolous and vexations.  In [11] the 1^st Defendant states unequivocally that “It is clear that the Plaintiff had been allotted the Crypto and that his allegation that ‘No GPC was allotted to the Plaintiff ...’ was a blatant lie”.  This is a reference to [8(3)] of the original Statement of Claim.  This phrase was deleted in the amendments, but it remains the Plaintiff’s pleaded case in [9] of the ASOC that he was not allotted any crypto currency.  I understood the Plaintiff’s counsel to accept that the only pleaded claim is for loss caused by the lack of an allotment and there is no alternative claim that the 1^st Defendant gave negligent advice and that the cryptocurrency was worthless.  This is consistent with the Plaintiff’s case to which I referred to earlier in [6] that the Plaintiff is not asserting the 1^st Defendant gave advice or expressed an opinion.  The Plaintiff has not filed any evidence disputing the 1^st Defendant’s evidence.  I asked the Plaintiff’s counsel if his solicitors have clear instructions disputing the 1^st Defendant’s evidence.  I was told not.  I, therefore, accept the 1^st Defendant’s evidence. It follows that the claim as pleaded had no prospect of success, because the Plaintiff received what he subscribed for.

9.The Notice of Appeal is dismissed with a costs order nisi that that Plaintiff pays the 1^st Defendant’s costs forthwith with a certificate for counsel.

Mr Peter K.M. Chung , instructed by Chan, Tang & Kwok, for the Plaintiff

Mr Kevin Hon, instructed by K.B. Chau & Co., for the 1^st Defendant