Wallbanck Brothers Securities (Hong Kong) Ltd v. Emily Tse and Others
Read the full judgment text of DCCJ 2422/2013 on BabelCite. This District Court judgment was delivered on 31 March 2015.
1. This is the defendants’ application to strike out a claim made by the plaintiff in the sum of HK$38,000.
Cited by 1 case · Cites 6 cases
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DCCJ 2422/2013 IN THE DISTRICT COURT OF THE HONG KONG SPECIAL ADMINISTRATIVE REGION CIVIL ACTION NO 2422 OF 2013 --------------------
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--------------------- DECISION ---------------------- 1.This is the defendants’ application to strike out a claim made by the plaintiff in the sum of HK$38,000. INTRODUCTION 2.The plaintiff is a financial services company. The plaintiff’s CEO, Mr Phil KF Chan, is also a practising solicitor. He is the sole principal of the plaintiff’s solicitors in the present proceedings. 3.The defendant were officers in the licensing department of the Securities and Futures Commission (“SFC”), the 3rd defendant having retired from the SFC on 31 May 2014 while the 1st and 2nd defendant are still working for the SFC. 4.This action commenced life in the Small Claims Tribunal (“SCT”) in September 2012, in which the plaintiff claimed a sum of HK$38,000 against the defendants. On 19 June 2013, the adjudicator at the SCT transferred the case to this court. 5.The defendants claim that the statement of claim (“SoC”) filed on 26 August 2013 was prolix, incomprehensible, and fundamentally flawed in failing to disclose any reasonable cause of action. Having sought and obtained further and better particulars, which they say proved to be even more prolix and unintelligible, the defendants applied to strike out the SoC on 20 February 2014. 6.On 4 March 2015, just two weeks before the hearing, the plaintiff filed an Amended Statement of Claim (“ASoC”) without leave. While the plaintiff is entitled to do so as defence has not yet been filed, the defendants say that it is undoubtedly a belated recognition that the SoC could not stand. 7.The defendants claim that the ASoC seeks to salvage the plaintiff’s claim from being struck-out. However, they say it suffers from the same core defects as the SoC. Accordingly, the defendants applied by summons dated 10 March 2015 to strike it out, alternatively for the amendments to be disallowed, in which case the SoC stands to be struck out. DISCUSSION The plaintiff’s claim 8.This case originated from an application made by the plaintiff for a Type 9 licence to the SFC concerning one of its staff by the name of Jr Marshall Trammell Mays (“Mays”) in 2008. 9.For various reasons, there had been some delays in the application process. 10.The plaintiff considers the delays were caused by the deliberate and malicious acts of the defendants and claims a sum of HK38,000 as damages for the “administrative time and costs (x 100 hours)” allegedly suffered by it as a result. The plaintiff’s SoC 11.The plaintiff’s SoC runs over 32 pages. They consisted of a number of very serious accusations made against the defendants. Most if not all of them are trivial, protracted, repetitive, incomprehensible and without any proper legal foundation. They included, inter alia, deliberate failure to provide a “rational, reason, legal basis of the defendant’s decisions and interpretation of the relevant provisions of the Securities and Futures Ordinance, Cap 571 (“the SFO”)”;deliberate failure to refer the legal enquiries to the legal department of the SFC; treating the plaintiff's comments, enquiries, requests and complaints as “abusive and offensive languages”;persistent failure to provide evidence and particulars to substantiate the representations regarding the plaintiff's comments, enquiries and requests as “abusive and offensive languages”;infringement of rights of representation to defend the allegations of “abusive and offensive languages”; making falsified and fabricated accusations against the plaintiff; continuous unlawful “Cold Shoulder Actions” against the plaintiff; persistent refusal to change and/or transfer the plaintiff's case to another team to avoid further confrontation and conflict;making further unjustified representations by the defendants as public officers with intent to pursue and implement possible criminal intimidation under section 24 of the Crimes Ordinance, Cap 200; perverting the course of justice against the plaintiff as witness in the complaint proceedings; perverting the course of justice and criminal intimidation by intimidating or threatening the plaintiff and disposing the evidence provided by the plaintiff; unlawful intimidation and threatening to revoke the plaintiff's license in order to prohibit the plaintiff from lodging any further complaints against the defendants; fraudulent misrepresentation to say that the plaintiff's complaint was not substantiated; and fortified, fabricated and falsified criminal offences against the plaintiff. 12.The alleged causes of action contained in the SoC, insofar as I can make them out, included:-
The plaintiff’s ASoC 13.The ASoC is a substantially different document than that of the SoC. The plaintiff has deleted §§28-65 and the Annexure (from pp7-31) of the SoC and substituted them with more incomprehensible and convoluted accusations. 14.Insofar as I can make them out from the ASoC, the plaintiff now claims that the defendants had, as public officers under the SFO, inter alia, committed the following “unlawful acts” against the plaintiff:-
15.The plaintiff further alleges in the ASoC that the “Cold Shoulder Action” of the defendants had caused “substantial and significant adverse impact, harm and loss” to the plaintiff (§13). They allegedly included, “undue delay and further undue delay with ultimate purpose to ruin and defeat the relevant applications for licence by the plaintiff” (§13(b)); subject the plaintiff to be “vulnerable to incur criminal liabilities under sections 383 and 384 of the SFO” (§13(b)); subject the plaintiff to be “vulnerable to the breaches of the provisions of the SFO and ultimately leading to the revocation of the plaintiff's licence” (§13(c)). 16.The plaintiff further alleges that a letter sent by fax by the 2nd defendant on 18 February 2009 contained false representation and that the SFC had failed to follow its internal established principles by referring the matter to a decision maker and investigator to handle the complaint (§17). 17.Further, the plaintiff alleges that there was a conflict of interests among the defendants. It claims that the 2nd defendant as the supervisor of the 1st defendant and the 3rd defendant as the supervisor of the 2nd defendant should not investigate into the alleged misconducts complained by the plaintiff against them (§20). 18.The plaintiff also alleges that “as avenge and revenge to the complaint” made by the plaintiff, the 3rd defendant made “intimidating and threatening representations as to revoke the licences of the plaintiff”; and to cause “further undue delay on the processing of Mays’s application” (§24). 19.In short, in the ASoC, the plaintiff claims that the defendants had made fraudulent misrepresentations; intentional concealment of important facts, unlawful and private dealings with the compliant; in breach of the tort of public misfeasance; acting in bad faith and dishonesty; committed misconducts against the plaintiff; and acting with malice against the plaintiff. The defendants’ main grounds of striking-out 20.Essentially, the defendants say that the ASoC should be struck-out on the following main grounds:-
Principles on striking-out 21.The defendants submit that the principles on striking-out under O 18 r 19 are clear:-
(A) Abuse of process: public law claim 22.The ASoC proceeds on the express basis that the defendants are public officers: §6 of ASoC. As said, the plaintiff’s complaints all stemmed from a standard application by one of the plaintiff’s officers Mays for a Type 9 licence from the SFC in 2008 and the defendants’ handling of that application: ASoC §15, 7-14. 23.The plaintiff alleges, amongst other things, “unreasonable acts” by the defendants in processing the licence application (p 2 heading); “unlawful” refusals to deal with plaintiff (§12); “undue delay” (§§16, 22, 36) and even “average and revenge” in “bad faith” (§34). I agree with the defendants’ submissions that none of these give rise to any private law cause of action; they are, if anything, matters of public law. 24.I further accept the defendants’ submissions that it is generally an abuse of process to pursue by way of an ordinary civil claim complaints falling within the scope of judicial review: see O’Reilly v Mackman [1983] 2 AC 237 at 285E; HKCP 2015 at 53/14/27; Link Organisation Plc v North Derbyshire Tertiary College [1999] ELR 20, at *26. 25.The acts complained by the plaintiff took place as far back as in 2008/2009. Yet proceedings at the SCT were only started in September 2012. I agree with the defendants that if allowed to proceed, the claim circumvents the protection afforded to public bodies and officials by the strict timeframe (normally 3 months from the date of the decision) for starting judicial review under O 53 r 4. It is trite that such protection exists for strong policy reasons: Leung v SJ [2006] 4 HKLRD 211, §21 (Ma CJHC); Po Fun Chan v Winnie Cheung (2007) 10 HKCFAR 676, §§14-15 (Li CJ). 26.For the aforesaid reasons, I find that the Plaintiff’s claim is frivolous, vexatious and an abuse of process. On this ground alone, the ASoC should be struck out. (B) No reasonable cause of action 27.The defendants submit that despite its length and prolixity, the ASoC discloses no reasonable cause of action for several reasons. 28.I agree. (i) Statutory immunity 29.Sections 380(1) and (3) of the SFO confer immunity on those in the defendants’ position, subject only to bad faith being shown:-
30.Mr Phil Chan for the plaintiff submits that section 380 only mentions the words “good faith” in the performance or purported performance of such functions by the SFC officials and the words “bad faith” cannot be found anywhere in that section. Therefore he submits that the defendants have misconstrued the section. With respect, that must be wrong. In this context, the showing of “bad faith” by the plaintiff is merely the converse of performing an act in “good faith” by the defendants. It is the other side of the coin. They are the same thing. In any event, there is nothing to suggest that the acts done by the defendants during the entire application process was anything other than performed in good faith. 31.In my judgment, therefore, the ASoC discloses no basis for alleging bad faith on the part of the defendants. It follows that ss 380(1) and (3) are engaged and the plaintiff’s claims are unsustainable. For this reason alone, I am of the view that the ASoC discloses no reasonable cause of action and should be struck out. (ii) Misfeasance in public office 32.The ASoC also refers to the tort of public misfeasance: see eg §§31-32. I agree with the defendants that in order to establish such misfeasance, the claimant must show that a public officer acted in bad faith and dishonestly abused his powers with the subjective knowledge that this would probably injure the claimant: Tang Nin Mun v SJ [2000] 2 HKLRD 32 at 329H-1 (Ribeiro JA). 33.Where the alleged subjective knowledge is in the form of “targeted malice” as pleaded by the plaintiff: ASoC §31(c), there must be conduct “specifically intended to injure a person or persons” or done “intentionally with the purpose of causing loss to the plaintiff” or “with intent to harm the plaintiff or a class of which the plaintiff is a member”. The inference of malice “cannot be drawn unless the official did foresee the consequences. It is not enough that he ought to have foreseen them if he did not do so in fact”: See Tang Nin Mun, supra 326G-328I. 34.The only specific pleaded loss is the alleged administrative time/costs totalling HK$38,000: §31(e); 36. I agree with Mr Jat SC, appearing with Mr Abraham Chan and Ms Prisca Cheung, counsel for the defendants, that there is no allegation the defendants subjectively intended this consequence. 35.I further agree with Mr Jat SC that the ASoC does not disclose any fact which might form a proper basis for inferring the requisite intention. The allegations of malice, bad faith and knowledge etc pleaded at §§33-35 are no more than bare assertions which fail to set out the specific factual elements for establishing subjective intent. 36.Lastly, the ASoC is also contrary to O 18, r 12(4) in failing to disclose the facts relied upon for inferring the requisite knowledge for targeted malice: see Tang Nin Mun at 329D-E and 329H-I. It is trite that claims based on bad faith are equivalent to claims based on dishonesty and must be struck-out absent proper particulars: HKCP 2015 at 18/12/11. (iii) Fraudulent Misrepresentation 37.Fraudulent misrepresentation has also been alleged by the plaintiff: ASoC §29. 38.Mr Chan submits that according to the established procedures laid down by the SFC for dealing with complaints against the SFC staff, independent and impartial “decision maker” and “investigator” should be assigned to handle the complaint. Both the decision maker and investigator will be persons who have not been involved in the subject matter of the complaint and who have not had any previous dealings with the complainant: §19. 39.The plaintiff alleges that in a reply letter written by the 3rd defendant dated 27 April 2009 to the plaintiff (“the Reply Letter”), the 3rd defendant mentioned that he was dealing with the complaint made by the plaintiff against a member of his staff contained in its letter dated 8 February 2009 (“the Complaint Letter”) §16 & §22. 40.The plaintiff says that the defendants made fraudulent misrepresentations in the Reply Letter in that they had treated the plaintiff’s Complaint Letter as a complaint against the SFC staff. The plaintiff further alleges that the defendants had intentionally concealed the “important fact” that the SFC had not treated the Complaint Letter as a complaint as indicated in the second preliminary defence filed by the defendants in the SCT proceedings: §29 (a) & (b). 41.Mr Chan says that the above formed the backbone of the plaintiff’s case in the present proceedings. 42.I must say that, like most of the ASoC, I find it difficult to follow the logic of the plaintiff’s arguments and how a case of fraudulent misrepresentation can be made out on those particulars. 43.The requisite elements for such a claim are well-established: see eg Bullen and Leake and Jacob’s Hong Kong Precedents of Pleadings (2013) at 18-01; HKCP 2015 at 18/8/13; ADS v Wheelock Marden & Co Ltd [1994] 2 HKC 264, 269E-270E (Bokhary JA). 44.In my view, none of these elements are found in the ASoC. In particular, the pleading identifies no material representation of act which defendants knew to be false. Further, there is nothing to suggest that the plaintiff had relied on those alleged fraudulent representations and that they have led to the alleged loss in the administrative costs and time now claimed by the plaintiff in the ASoC. 45.For those reasons, the claim of fraudulent misrepresentation must be struck out also. (iv) Failure to plead particulars as to individual defendants 46.Further, I agree with Mr Jat SC that the ASoC fails to identify the cause(s) of action that each of the individual defendants is said to face and the specific acts that each of the individual defendants allegedly committed so as to give rise to liability on his/her part. 47.I agree that this is a fundamental defect. The ASoC makes serious allegations of misconduct and subjective mental states. It is improper to maintain such allegations absent a property particularised case which allows each defendant to know the specific factual and legal case made against him/her. (C) Failure to comply with O 18 r 7 / frivolous and vexatious 48.A fundamental rule of pleadings is that they must only contain a summary of the material facts relied upon. They must not plead evidence, and statements must be as brief as the nature of the case admits: O 18 r7. 49.I agree that the defendants’ submissions that the ASoC is prolix and laden with repetitious averments which go nowhere, consist of empty rhetoric, and are wholly embarrassing: see eg §§10, 12-13, 21, 22-26 & 36, 28-29 of ASoC. 50.I agree that it should therefore be struck-out on the further basis that it departs so far from O 18 r 7 that it is “embarrassing” and “tantamount to an affront to the court” and thus vexatious or frivolous or otherwise an abuse: see Kaisilk v URA [2004] 1 HKLRD 907, §3 (Rogers VP); Advance Finance Ltd v Pang Sze Nui, Loretta [1986] HKLRD 523, 537H-J (Huggins VP); more recently Tchenguiz v Grant Thornton UK LLP [2015] EWHC 405 (Comm), §§1-6. Breach of underlying objectives of CJR 51.As a piece of pleading, the ASoC in my view is totally incomprehensible. I agree with the defendants that it cannot be just and proportionate to require the court or the defendants, to strain to comprehend the most basic facts and legal propositions raised in the plaintiff’s claim. 52.I also agree with Mr Jat SC that, on any view, the ASoC is not a proper pleading. It provides no proper basis for the further progression of these proceedings. Rather, it is totally contrary to the underlying objectives of the CJR. 53.On that ground alone, I consider that the plaintiff’s case ought to be dismissed under the court’s inherent jurisdiction as frivolous and vexatious: HKCP 2015 at 18/19/21; Dow Hager Lawrence v Lord Norreys (1890) 15 App Cas 210, 219-220 (Lord Herschell). Significance of the plaintiff’s last minute amendments 54.As pointed out by the defendants, various allegations in the SoC have been deleted in ASoC. In particular, the allegations as to criminal actions by defendants, breach of duties of care in tort, breach of the Ombudsman Ordinance, and breach of plaintiff’s alleged constitutional rights have been removed. 55.The plaintiff has thus effectively (though very belatedly) conceded that such allegations, which are devoid of any legal and factual basis, should never have been raised. 56.In the aforesaid premises, I consider that the ASoC should be struck out, or alternatively, the amendments should be disallowed under O 20 r 4(1) and the SoC be struck out. Addendums to the plaintiff’s skeleton submissions 57.In a last ditch attempt to salvage the plaintiff’s case, the plaintiff’s solicitors have, in the late afternoon on the day before the hearing, lodged with the court 2 further addendums to the plaintiff’s skeleton submissions. In the first addendum, the plaintiff raised further outlandish accusations against the defendants, their counsel and solicitors. The accusations included they had knowingly and/or recklessly misled the court. In the addendum, the plaintiff’s solicitors referred extensively to the second preliminary defence filed by the defendants in the SCT proceedings. 58.In my view, such accusations are totally groundless and without any foundation, whether legal or factual. It shows a desperate attempt on the part of the plaintiff and its solicitors to try to justify why a totally incomprehensible and baseless SoC and ASoC had been filed in the first place. I have no hesitation to dismiss such unsubstantiated and unjustifiable accusations. 59.In the second addendum, the plaintiff tries to argue that (i) the application is against the rule of res judicata; and (ii) the defendants’ applications for further and particulars, two applications for striking-out and application for the transfer of the case from the SCT to the District Court were done in order to cause undue delay and as tactics to avoid filing their defence. The plaintiff claims that they amounted to an abuse of process and is against the objective and spirit of the CJR. 60.On the rule of res judicata, there is no doubt that the plaintiff is wrong. First, there was never a concluded litigation in the SCT. The case was merely transferred to the court before the parties had the opportunity to argue on the issues raised in the plaintiff’s claim and the defendants’ defence. Second, there was never an adjudication on whether the plaintiff’s claim ought to be struck out by the adjudicator. In fact, Order 18, rule 19 does not even apply in the SCT as they have no such rules in the tribunal. Third, once the case is transferred to this court, it takes on a new life of its own, with new pleadings, new facts and new documents filed by the parties. Therefore, the defence filed by the defendants in the SCT has no relevance in the present proceedings. 61.Further, there is no substance in the plaintiff’s allegations of abuse of process and committing acts contrary to the objective and spirit of the CJR on the part of the defendants. 62.As in the case of its main skeleton submissions, I find the two addendums contain no real substance and I have no hesitation to dismiss them. CONCLUSION 63.In my view, the very serious allegations against the SFC officers are made without any legal or factual basis. It was done with malice and intention to “punish” the defendants. To allow the case to go further would be a complete waste of the court’s time and valuable resources. 64.For the above reasons, I hereby order that the ASoC dated 4 March 2015 be struck out and the action be dismissed. Alternatively, I order that the amendments of the SoC without leave be disallowed and the SoC be struck out. Costs 65.During the hearing, I put to Mr Chan that the true reason why this case was commenced in the SCT was because the plaintiff thought that they could involve the defendants personally in the proceedings (where no legal representation are allowed) and causing them maximum degree of nuisance without the plaintiff having to incur any legal costs (the CEO of the plaintiff being a practising solicitor himself). Surprisingly, Mr Chan agreed to what I said. In fact, if one reads through the claim filed by the plaintiff in the SCT, it is not difficult to come to that conclusion at all. 66.In my view, not only this is a plain and obvious case to be struck out, this is a claim that should not have been brought in the first place. It was done with an ulterior motive, namely, to drag the defendants through the mud with a view to cause them nuisance and distress. Unsurprisingly, the defendants have engaged senior and junior counsel and a leading firm of solicitors to deal with the matter. 67.In my judgment, this is one of those rare cases where full indemnity costs should be awarded against the plaintiff. I therefore will made an order nisi that the plaintiff do pay the defendants’ costs of the action, including the costs of the defendants’ summonses dated 20 February 2014 and 10 March 2015, with certificate for two counsel, on an indemnity basis, such costs will be summarily assessed. The order nisi will become absolute after 14 days in the absence of any application to vary the same. The defendants are to lodge their statement of costs with copy to the other side for the purpose of summary assessment within 21 days from the date hereof and the plaintiff to lodge their statement of objection, if any, within 14 days thereafter.
Mr Phil Chan, of Philips, for the plaintiff. Mr Jat Sew Tong SC, leading Mr Abraham Chan & Ms Prisca Cheung, instructed by Clifford Chance, for the 1st, 2nd & 3rd defendants. |
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