Matsumoto Motors Ltd v. Plotio Property and Management Co Ltd and Others

HCA 1308/2012

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

ACTION NO. 1308 OF 2012

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BETWEEN

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REASONS FOR DECISION

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AN OVERVIEW OF THE PLAINTIFF’S CLAIMS AGAINST THE 2^ND TO 6^TH DEFENDANTS

1.The plaintiff rented 23 parking spaces (“the Parking Spaces”) in the Car Park of a residential building known as Oceanic View (“the Car Park”) from the 2^nd to 6^th defendants for 4 years from 1 June 2011 pursuant to 5 Tenancy Agreements (“the Tenancy Agreements”).

2.In early October 2011, a director of the plaintiff noticed that the CCTV system of the Car Park was not working.  On 10 October 2011, he further found that the car lift in the Car Park was out of order and that the plaintiff’s cars which were parked there had been damaged. 

3.As a result, the plaintiff commenced this action against the 2^nd to 6^th defendants herein (in addition to the 1^st and 7^th defendants who are the manager and the Incorporated owners respectively of the development) and claimed for more than HK$2.6 million.  This sum comprises of, among other things, the value of some of the plaintiff’s damaged cars which could not be repaired, towing costs, costs of repair (in respect of the rest of the plaintiff’s cars which were parked there), depreciation of cars, rental paid to the 2^nd to 6^th defendants and senior staff salaries.  The legal and factual bases of claim in respect of some of these items are not entirely apparent to me, but for reasons which will be explained hereinbelow, I do not think it matters at the end of the day.

4.As against the 2^nd to 6^th defendants, the plaintiff alleged in the Amended Statement of Claim, among other things, that they had:

(a)  been negligent, inter alia, in failing to properly care for the plaintiff’s cars, to ensure that the system of protection in the Car Park was adequate for the safe custody of those cars and to arrange for any repair work to be carried out to the car lift or the CCTV system;

(b)  breached their duties under the DMC to, among other things, “provide and maintain watchmen, CCTV system and other security measures” at the Car Park;

(c)  breached the Tenancy Agreements to take reasonable care of the plaintiff’s cars; and

(d)  breached their duty as custodians and/or bailees for reward to take reasonable care of the plaintiff’s cars.

THIS APPLICATION

5.By summons filed on 11 September 2012, the 2^nd to 6^th defendants seek to strike out the plaintiff’s action against them on the ground that it discloses no reasonable cause of action and that the proceedings herein against them are frivolous.

PRINCIPLES APPLICABLE TO STRIKING-OUT APPLICATIONS

6.The applicable principles are trite and are undisputed between the parties.  It has been emphasized time and again that it is only in plain and obvious cases that the court should strike out any pleadings.  A claim must be obviously unsustainable, the pleadings unarguably bad and it must be impossible, not just improbable, for the claim to succeed before the court would strike it out.  The mere fact that the case is weak and not likely to succeed is not enough. Further, a proceeding is frivolous when it is not capable of reasoned argument, without foundation or where it cannot possibly succeed.

DISCUSSION

7.With the above in mind, I will now turn to the individual causes of action one after another.

Negligence

8.It is undisputed that the matters complained of in this action concern the management and maintenance of common areas and facilities at the Car Park. As such, I cannot see how it can be said that the 2^nd to 6^th defendants could owe the plaintiff any duty of care in that regard.  They are plainly not liable for the disrepair or mismanagement of any common parts and facilities at the Car Park.  Neither should they, as individual owners, be liable to put in place any security system at the Car Park.

9.Furthermore, pursuant to section 16 of the Building Management Ordinance (Cap 344, Laws of Hong Kong) (“BMO”), the liabilities of the owners in relation to the common parts of the building are only enforceable against the Incorporated Owners of the building to the exclusion of the owners thereof.

10.For the above reasons, the plaintiff has no reasonable cause of action on negligence against the 2^nd to 6^th defendants.

Breach of DMC

11.A number of clauses of the DMC in question has been quoted in the Amended Statement of Claim.  However, it is unclear therein as to which particular clause(s) of the DMC the 2^nd to 6^th defendants were said to have breached.

12.In her written submissions, Ms Low, counsel for the plaintiff, further relied on section 34H of the BMO and argued that since the Car Park is a private property owned by the 2^nd to 6^th defendants, they were responsible for the security thereof.  Ms Low is not entitled to make this line of submission because it was only pleaded by the plaintiff that the 2^nd to 6^th defendants are the owners of the Parking Spaces.  Nothing was mentioned in the Amended Statement of Claim in relation to the ownership of the rest of the Car Park.

13.I also note that the said section 34H was not even pleaded in the Amended Statement of Claim.

14.In any event, since Ms Low has confirmed to me at the hearing, rightly in my view, that the plaintiff would not proceed against the 2^nd to 6^th defendants on breach of DMC in this action, I do not have to deal with this claim further.

Breach of the Tenancy Agreements

15.Like its claim on breach of DMC, the plaintiff has not specified in its Amended Statement of Claim as to which particular contractual provision(s) it was alleged that the 2^nd to 6^th defendants have breached.  It was only pleaded that there was an implied term in each of the Tenancy Agreements that the 2^nd to 6^th defendants were to take reasonable care of the plaintiff’s cars in their custody.

16.As this striking-out application was also brought under Order 18 rule 19(1)(b), the parties involved have filed affirmations in support of and in opposition to (as the case may be) the application.  Both sides have exhibited the Tenancy Agreements to their affirmations.  It suffices for me to say that I can find nothing therein which, under the pleaded circumstances of the case, can be said to have been breached by the 2^nd to 6^th defendants.  Ms Low also accepts this.

17.As far as the alleged implied terms are concerned, Ms Low submitted that such terms are implied by the mere fact that the plaintiff was allowed to park its cars at the Parking Spaces.  I cannot see how such terms may be implied in the circumstances of the present case.  As a matter of fact, it is impossible to assert that the cars parked at the Parking Spaces were in the custody of the 2^nd to 6^th defendants at any time.

18.Hence, the plaintiff’s claim under this head is also, in my view, unarguably bad.

Breach of duty as bailees

19.It was further pleaded by the plaintiff that the 2^nd to 6^th defendants were under a duty to the plaintiff as custodians and/or bailees for reward.  The plaintiff’s case is that this duty arose because the parties had entered into the Tenancy Agreements.

20.The issue here is whether such a duty exists under the present scenario.

21.In support of her case, Ms Low has, in her list of authorities, included references in Palmer on Bailment (3^rd edition (2009)), from paragraph 5-001 all the way to paragraph 5-021.  That part of the work discussed the difference between bailments and licences and does not assist the plaintiff’s case at all.  Without disrespect, I think I am only required to refer to one sentence therein in which it was stated that:

“The law has repeatedly drawn a distinction between bailments and licences; the former requiring a transfer of possession and a voluntary acceptance of the common law duty of safekeeping, the latter amounting to no more than a grant of permission to the user of a chattel to leave it upon the licensor’s land on the understanding that neither possession shall be transferred nor responsibility for guarding the chattel accepted.”

(at paragraph 5-001, emphasis added)

22.The sentence quoted above was also cited by Lam J (as he then was) in Ho Sui Kam v On Park Parking Ltd [2005] 2 HKLRD 434 at paragraph 22.

23.I have no hesitation in coming to the conclusion that there is no bailor/bailees relationship between the plaintiff and the 2^nd to 6^th defendants.  It is clear that they only had landlords and tenant relationship, but nothing more.

24.In the present case, at no point of time was there any transfer of possession or control of the plaintiff’s cars to the 2^nd to 6^th defendants, not to say any acceptance of responsibility on the latter’s part for the safekeeping thereof.  Ms Low submitted that from 1 June 2011 when the plaintiff parked its cars at the Parking Spaces, the possession of those cars should be treated as having been transferred to the 2^nd to 6^th defendants which should in turn be regarded as having accepted the responsibility of safekeeping those cars.  I do not accept these submissions.  It cannot be disputed that the plaintiff was in exclusive possession of the Parking Spaces and that the cars parked thereat were under the possession, custody and control of the plaintiff at all material times.  It is impossible to argue successfully that the possession or control of the plaintiff’s cars had ever been transferred to the 2^nd to 6^th defendants.  Indeed, Ms Low conceded that the keys to those cars had never been handed over to the landlord defendants.

25.Ms Low further argued that on the facts of the present case, there is at the very least an arguable case that a bailment exists and this issue should be determined at the trial.  She has specifically drawn my attention to the fact that the Parking Spaces are located in a multi-storey building instead of in an open space and argued that the tenant would expect the landlords to do something for the protection of the plaintiff’s cars.  With respect, for the reasons set out above, I do not agree with Ms Low’s submissions.  It is bizarre to suggest that parking spaces owners who have rented out such spaces to others would, by that fact alone, be charged with a duty to take care of their tenants’ cars parked thereat.  It would be the same even if the Parking Spaces in the present case are located in an open space rather than in a multi-storey building.

ORDER

26.For the reasons aforesaid, the plaintiff’s action against the 2^nd to 6^th defendants should be dismissed.

27.The 2^nd to 6^th defendants’ costs in this action and of this application (with certificate for counsel for this hearing) should be borne by the plaintiff.  Such costs should be summarily assessed pursuant to Order 62 rule 9A(1)(a) of the Rules of the High Court. For this purpose, the 2^nd to 6^th defendants should lodge and serve their Statement of Costs within 14 days hereof, and the plaintiff should lodge and serve its list of objections within 14 days thereafter.  The summary assessment would then be conducted on paper.

28.Having consulted with Ms Low, I have also given an order consequential upon my decision herein that the plaintiff do file and serve its Re-Amended Statement of Claim within 14 days hereof.

THE HANDLING OF THIS APPLICATION

29.There are two matters which I would like to turn to at the end of this Decision.

Affirmation evidence

30.As mentioned at the outset, this application was made on two grounds, namely, that there was no reasonable cause of action and that the proceedings against the 2^nd to 6^th defendants were frivolous.  As accepted by both counsel, the “frivolous” ground does not in reality add anything to the application because the only issue here is whether the plaintiff’s claims against the 2^nd to 6^th defendants are unsustainable.

31.Because of the inclusion of the “frivolous” ground, Order 18 rule 19(2) is inapplicable to the present case.  Be that as it may, affirmation evidence should generally not be helpful in circumstances like the present because the Court should decide on whether there is any reasonable cause of action only on the basis of the plaintiff’s case as pleaded but not upon other non-pleaded factual matters.  I note in particular that the plaintiff has not proposed to make any further amendments (by adding more material facts) to its Amended Statement of Claim.

32.However, both sides have filed affirmations in support of and opposition to (as the case may be) the application.  In those affirmations, as both counsel fairly admitted at the hearing, almost all effort had been spent on repeating matters already pleaded in the Amended Statement of Claim, making submissions and referring to irrelevant matters.  In my view, these affirmations did not assist in the disposal of this application at all, and much time and costs spent on the preparation of such affirmations have been wasted.

33.The legal teams on both sides should be reminded of what Cons VP stated in Deak & Another v Deak Perera Far East Ltd (in liquidation) [1990] 2 HKC 198 at 208B – F:

“In recent years, this court has, on many occasions, commented adversely on what appears to be a fairly widespread and growing practice to include argumentative material in affidavits or affirmations submitted to this court or the courts below: see, for example, Robert Lee Flickinger v Director of Immigration [1988] 1 HKLR 81, 94. Nevertheless, the present instance provides yet another blatant example; so much so that the judge felt constrained to add to his judgment the following comments:

Before parting with this case, I would like to express my indebtedness to counsel. But on this occasion, sadly, I have to couple it with this reflection: Despite the high quality of the counsel involved, a large amount of bickering entered into the arguments before me; and I think that that was due in no small measure to the fact that the affidavits are extremely argumentative and, what is worse, argumentative in a heated sort of way. The Court of Appeal has spoken out against such affidavits on more than one occasion. It is not the function of affidavits to argue, still less to argue in a quarrelsome fashion. I hope that in future, the profession will bear in mind what the Court of Appeal has said on the point.

In view of the failure of this court’s criticisms to produce any improvement in the past, we feel unable to share the hope expressed by the judge in his last sentence.  Rather do we venture to suggest that instead, the time has now come when judges at first instance should carefully consider, when affidavits or affirmations of that kind are presented to them, whether the nature and extent of the offensive material is such that the whole affidavit should be struck out: see Rules of the Supreme Court O 41 r 6.”

34.I hope that in future, practitioners should give more serious thoughts as to what may be usefully included in affirmations, especially those which are to be filed in applications of this sort.  No affirmation should be filed for the mere purpose of filing one.

35.Unfortunately, that is not the only problem I find in the preparation of the affirmations in the present case.

36.In Woo Ma Man’s Affirmation filed by the plaintiff on 18 September 2012 in opposition to this application, the following documents were exhibited:

(a)   the Tenancy Agreements and the corresponding stamp certificates;

(b)   the DMC and Management Agreement of Oceanic View;

(c)   2 Schedules of damages;

(d)   A letter sent from the plaintiff’s solicitors to the 2^nd to 6^th defendants’ solicitors dated 28 August 2012.

37.Out of the above, items (a), (b) and (d) had already been exhibited to Chan Sui Chung’s Affirmation filed by the 2^nd to 6^th defendants on 10 September 2012 in support of the application.  Thus the plaintiff’s solicitors had totally ignored paragraph 11 of Practice Direction 10.1 which reads:

“Where a deponent wishes to refer to a document already exhibited to some other deponent’s affidavit, he should not also exhibit it to his own affidavit.”

38.In relation to item (c), those schedules were as same as those attached to the Amended Statement of Claim.  There is no point for them to be exhibited again.

39.In the light of my comments (to which Ms Low accepted entirely), the plaintiff’s solicitors have undertaken not to charge the plaintiff on the costs of the preparation of Woo Ma Man’s Affirmation (including any photocopying charge in relation thereto).  In my view, it is only fair for the plaintiff’s solicitors to do so and this undertaking is recorded and accepted by this court.

The hearing bundle

40.The preparation of the hearing bundle also left much to be desired.  Part of Practice Direction 5.4 was totally disregarded by those who were responsible for such preparation.

41.Firstly, contrary to paragraph 4(1)(d) of PD 5.4, both the Statement of Claim and the Amended Statement of Claim were included.

42.Secondly, contrary to paragraph 4(2)(c) of PD 5.4, all 5 Tenancy Agreements (which contain exactly the same provisions apart from the particulars of the Parking Spaces, the tenants and the amount of rental which are not in dispute) had been included in the bundle.  It is sufficient for a copy of one of those Tenancy Agreements to be included as being representative of the others in the same category.

43.Thirdly, as aforesaid, a lot of documents had been exhibited by the plaintiff again unnecessarily when the same had already been exhibited to the affirmation filed by the 2^nd to 6^th defendants.  However, when the hearing bundle was prepared, these duplicated documents were included as well.  If those who were responsible for the preparation of the bundle would care to pause and think, it would not be difficult for him/her to appreciate that it serves no useful purpose at all for the same documents to be included twice.  The 2^nd to 6^th defendants’ solicitors should have liaised with the solicitors’ firm on the other side and sought to agree between them that these duplicated documents be omitted from the bundle. 

44.Fourthly, there are a number of standard forms attached to the Writ of Summons including the Acknowledgment of Service of Writ of Summons, Directions for Acknowledgment of Service, Notes of Guidance, etc. Only on extremely rare occasion (if at all) would these documents have any bearing on the hearing before the Court.  As far as this application is concerned, these documents are totally irrelevant.  These documents, together with the Writ of Summons, may be safely omitted from the hearing bundle. 

45.It is noted that in paragraph 4 of PD 5.4, it is provided that “hearing bundles should contain only the documents relevant to the particular application or appeal and to which the parties will need to refer in the course of their respective submissions”.  Further, in paragraph 4(1)(c) thereof, it is stipulated that “there is no need to put in the generally indorsed writ of summons (if any) unless the contents of the general indorsement are relevant to the application or appeal”.  Those who are responsible for preparing hearing bundles should exercise their discretion sensibly in accordance with the said provisions instead of putting in everything mechanically.

46.Practitioners should be reminded that pursuant to paragraph 4(7) of PD 5.4, the advocates who have the conduct of the case on behalf of the parties have the duty to ensure that the hearing bundles are properly prepared.  By the time when the hearing bundles are compiled, those advocates should have some ideas as to what the real issues are and what documents would have to be referred to at the hearing.  The hearing bundles should then be prepared accordingly. 

47.The mere fact that some documents have been exhibited does not necessarily mean that they have to be included in the bundle.  Take this application as an example.  Given Ms Low’s acceptance that (1) the plaintiff’s complaints only relate to the common parts and facilities at the Car Park; and (2) none of the clauses in the DMC (whether quoted in the Amended Statement of Claim or not) has anything to do with the 2^nd to 6^th defendants, it is totally unnecessary for the DMC to be included in the hearing bundle (not to say being included twice).

48.In the present case, if the preparation work of this application has been done properly in accordance with the Practice Directions, and if the lawyers involved had applied their minds as to what documents would have to be referred to at the hearing, only a very small part of the documents should remain in the bundle.  Unfortunately, it seems that no one involved ever bothered about this.  They simply put in everything.  With greatest respect, this is unacceptable.

49.I do not think it is fair if the lay clients have to bear any costs in relation to the time and costs incurred on the preparation of the redundant part of the hearing bundle.  This will be taken into account when the summary assessment of costs is conducted. 

50.In response to my comments, the 2^nd to 6^th defendants’ solicitors have given this court an undertaking, which this court accepts, not to charge the 2^nd to 6^th defendants any costs on the preparation of bundle which the 2^nd to 6^th defendants fail to recoup from the plaintiff.

Ms Theresa Low, instructed by Messrs Y K Lau & Chu, for the plaintiff

Mr Sergius Wai, instructed by Messrs N K Tsang & Co, for the 2^nd to 6^th defendants