YEUNG WAH WAI v. LONG TEAM LTD AND ANOTHER

HCA 1289/2020

[2021] HKCFI 1035

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

ACTION NO 1289 OF 2020

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D E C I S I O N

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A. Introduction

1.  The Plaintiff was the former tenant of the 1^st Defendant. The 2^nd Defendant was the agent who introduced the Plaintiff to the 1^st Defendant, which led to the signing of a Tenancy Agreement.

2.  The Plaintiff commenced an action in the District Court suing the 1^st Defendant for breach of the Tenancy Agreement in failing to remedy the leakage problem and deceit.  After trial, the District Court dismissed the Plaintiff’s claim.

3.  Almost 3 years after the District Court’s judgment, the Plaintiff instituted the present claim in the Court of First Instance for the same causes of action against the 1^st Defendant.  The Plaintiff also brought in the 2^nd Defendant as a defendant, the causes of action being assisting the 1^st Defendant in breach of contract, conspiracy and defamation.

4.  The Defendants took out a summons to strike out the Plaintiff’s claim and to dismiss the action on the grounds of res judicata and absolute privilege.  Master J Wong granted the application. 

5.  The Plaintiff took out a summons seeking to overturn Master J Wong’s decision. Master Lai dismissed the Plaintiff’s summons. 

6.  This is before me a summons to overturn Master J Wong’s order.  The Plaintiff’s case is that the Defendants adduced no evidence to strike-out his claim.

7.  The Defendants oppose the summons in that the use of a summons instead of a notice of appeal against Master J Wong’s decision was a wrong procedure.  The Defendants also say that the appeal has no merits, relying on the same grounds before Master J Wong. 

8.  The issues are therefore:

(1)  Whether the Plaintiff had wrongly issued the summons;

(2)  Whether the Plaintiff has adduced evidence in support of the strike-out application;

(3)  Whether the Plaintiff was barred by res judicata from pursuing the present claim; and

(4)  Whether the defence of absolute privilege applied to the claim in defamation.

B.    Background

9.  The Tenancy Agreement was for a term of 2 years from 12 August 2014.

10.  The Plaintiff claimed that there was water leakage in the rented premises. As the 1^st Defendant refused to properly repair it, the Plaintiff declined to pay rent.  The 1^st Defendant took out proceedings in the Lands Tribunal and obtained an order for possession in 2016, following the Plaintiff’s default for the third time in paying rent.

11.  On 21 March 2016, the Plaintiff sued the 1^st Defendant in the District Court under DCCJ 1296/2016 (“DCCJ Action”) for (i) breach of the terms in the Tenancy Agreement relating to repair and maintenance; and (ii) deceit in that the 1^st Defendant leased out the premises at market rent knowing that the ceiling had serious water dripping problem.

12.  After trial, Her Honour Judge Tsui dismissed the Plaintiff’s claim in its entirety.  See 楊華偉v添朗有限公司, DCCJ 1296/2016，18 September 2017 (“Judgment”).

13.  The Plaintiff’s application for leave to appeal against the Judgment was dismissed, first by Her Honour Judge Tsui on 15 December 2017 and then by the Court of Appeal on 26 September 2018 in CAMP 49/2018.

14.  Almost 3 years after the Judgment, the Plaintiff commenced the present proceedings in the Court of First Instance on 3 August 2020, this time adding the 2^nd Defendant as a defendant.

15.  The statement of claim pleaded the following case against the 1^st Defendant:

(1)  That in ignoring the existing problem of ceiling leakage and dripping, the 1^st Defendant was in breach of the Tenancy Agreement (“breach of contract claim”);

(2)  That the 1^st Defendant intentionally deceived the Plaintiff on the issue of illegal main structure in the relevant rental unit (“deceit claim”); and

(3)  That the 1^st Defendant purposely slandered the Plaintiff with the defence in the DCCJ Action (“defamation claim”).

16.  The statement of claim pleaded the following case against the 2^nd Defendant:

(1)  That the 2^nd Defendant was involved in conspiracy to defraud on the contract by leasing the property with illegal structures (“conspiracy claim”);

(2)  That the 2^nd Defendant assisted the 1^st Defendant to breach the contract and the various Ordinances, by “impeding the planned inspection of ceiling water leak and dripping” (“assisting breach of contract claim”); and

(3)  That 2^nd Defendant submitted a witness statement in the DCCJ Action in which “the 2^nd Defendant gave false evidence in court, by testifying that man-made steam could cause ceiling water leakage and dripping in the relevant rental unit at the material time”; and that “the 2^nd Defendant intentionally defamed the Plaintiff in court under oath with the mentioned statement” (“defamation claim”).

17.  By a summons taken out on 14 September 2020, the Defendants applied to strike-out the Plaintiff’s claims and for the action to be dismissed.  The Defendants asserted that there was no reasonable cause of action, that the claims were frivolous and vexatious or were otherwise an abuse of court process.  In substance, for all the claims except defamation, the Defendants rely on res judicata and say that those claims had or could have been litigated under the DCCJ Action.  It was an abuse of process to relitigate in the Court of First Instance.  In respect of the defamation claims, they were bound to fail by reason of the doctrine of absolute privilege.

18.  On 17 December 2020, Master J Wong granted an order in favour of the Defendants and ordered the Plaintiff to pay costs on indemnity basis assessed at $110,000.

19.  On 23 December 2020, the Plaintiff took out a summons to strike-out Master J Wong’s order.  On 2 February 2021, Master R Lai dismissed the summons and awarded costs of $1,040 to the Defendants. 

20.  On 10 February 2021, the Plaintiff took out the present summons to overturn Master J Wong’s order.

C.    Legal principles on appeal and strike-out

21.  An appeal against a Master’s decision operates by way of a rehearing. The Court considers the matter afresh.

22.  It is only in plain and obvious cases that the Court will strike out a pleading and dismiss an action.  The claim must be obviously bad and incurable by amendment.  Disputed facts will be taken in favour of the Plaintiff.  There will be no trial on affidavits.  For striking out on the ground of lack of reasonable cause of action, no affidavit evidence is admissible.  A claim is frivolous if it is without foundation or cannot possibly succeed.  A claim is vexatious when it is oppressive and/or lacks bona fides: Hong Kong Civil Procedure 2021, Vol 1, §18/19/7.

D.   Legal principles on res judicata

23.  The Defendants rely on both cause of action estoppel and issue estoppel.

24.  Cause of action estoppel prevents a party from re-litigating a cause of action which has been finally decided in an earlier judgment on the merits.  The estoppel bars re-litigation of the entire cause of action, including any reformulation thereof.  The doctrine applies to all matters which existed at the time of the giving of the judgment and which the party had an opportunity of bringing before the court.  See Total Lubricants Hong Kong Ltd v Christphe de letter of authorization Cropte de Chanterac [2013] 2 HKLRD 838, at §§13-17, Court of Appeal.

25.  A “cause of action” is simply “a factual situation the existence of which entitles one person to obtain from the court a remedy against another person”.  The addition of further particulars or instances does not amount to a distinct or new cause of action: Sun Cheong Construction Co Ltd v The Incorporated Owners of King Fu, Ho Fu, Ki Fu & Ka Fu Buildings [2018] HKCFI 1181, at §§10-12, Mimmie Chan J.

26.  The true basis of res judicata is abuse of process.  If the court is satisfied that the claim or defence should have been raised in the earlier proceedings if it was to be raised at all, the bringing of a claim or the raising of the defence in later proceedings may, without more, amount to abuse of process.  Where elements such as a collateral attack on a previous decision or some dishonesty are present, the later proceedings will be much more obviously abusive: Healthy Living Products International Ltd & anor v Murray Alastair Elliot [2012] 1 HKLRD 49 at §40, Court of Appeal.

27.  Issue estoppel needs to meet 3 requirements:

(1)  The issue raised in the prior and current proceedings is the same;

(2)  The issue has been determined with finality in the earlier proceedings; and

(3)  The parties to the judicial decision or their privies were the same persons as the parties to the proceedings in which the estoppel is raised or their privies.

See Kan Wai Chung v Hau Wun Fai, HCA 811/2010, 6 February 2012, at §§27, 36-38, Poon J (as he then was).

28.  Under the extended doctrine of res judicata, or Henderson v Henderson abuse, the court has power to strike out attempts to re-litigate a decided issue as an abuse of process of the court, even where the parties to the subsequent proceedings are not the same and cannot be described as privies of the original parties.  In such a case, the onus is on the person who relies on the earlier decision to show “special circumstances” to demonstrate that relitigation would amount to an abuse of process: King’s City Holdings Ltd v De Monsa Investments Ltd, CACV 205/2012 (unreported, 14 June 2013) at §§39-40 & 43, Court of Appeal.

E.    Legal principles on absolute privilege

29.  In the context of a defamation claim, the absolute privilege which covers proceedings in or before a court of justice includes 3 categories:

(1)  All matters that are done coram judice, which extends to everything that is said in the course of proceedings by judges, parties, counsel and witnesses and includes the contents of documents put in as evidence;

(2)  Everything that is done from the inception of the proceedings onwards (starting with the writ/originating document) and extends to all pleadings and other documents brought into existence for the purpose of the proceedings; and

(3)  Proofs of evidence of witnesses taken by a solicitor.

Wong Shui Kee Roger t/a Roger S. K. Wong & Co, Solicitors v Victor L. L. Chu & ors [2003] 1 HKC 125 at §7.

30.  The defence of absolute privilege is, as the name suggests, absolute in nature.  It will provide a complete answer to any claim for defamation even where the relevant remarks are completely untrue or made with malice: Wong Shui Kee Roger, §23.

31.  I now turn to the issues.

F.    Procedural error

32.  I agree with Mr Ng, solicitor for the Defendants, that the Plaintiff’s present summons was procedurally flawed.  As the Plaintiff was effectively challenging Master J Wong’s order on the merits, he should have appealed instead of issuing a summons. 

33.  Even if I were to overlook the procedural error, the Plaintiff was out of time in appealing.  The appeal should have been brought within 14 days of Master J Wong’s order, ie by 31 December 2020.  The Plaintiff was out of time by 41 days.  He never explained the reason for delay.  On this ground alone, the appeal should be dismissed. 

G.   Failure of the Defendants to produce evidence in support of the strike-out application

34.  The Plaintiff has misunderstood the law.  The Defendants have filed an affirmation in support of the strike-out application.  It was also assumed that the Plaintiff would come up to proof on his statement of claim.  Where there was dispute as to facts, they were taken in favour of the Plaintiff.

35.  Subsequent to this hearing, the Plaintiff filed an affirmation on 16 April 2021.  As the summons is in substance an appeal against Master J Wong’s decision, no fresh evidence would be allowed; so I disregard that affirmation.

H.   Res judicata

36.  In §5 of the Judgment, Her Honour Judge Tsui described the Plaintiff’s cause of action as breach of the Tenancy Agreement and deceit.

37.  Her Honour Judge Tsui decided against the Plaintiff, holding that the alleged water dripping did not happen (§57 of the Judgment).  Even if there was water dripping, the 1^st Defendant committed no breach of contract despite not arranging for repairs (§58 of the Judgment).

38.  In the present case, the Plaintiff relied on the same Tenancy Agreement and the same factual scenario as for the DCCJ Action.

39.  Insofar as the 1^st Defendant was concerned, the Plaintiff was plainly barred by issue estoppel from making the breach of contract claim and deceit claim against the 1^st Defendant.  The Plaintiff was bound by the findings in the Judgment.  Even if they were not the same claims, the Plaintiff could and should have made those current claims in the District Court.  He was barred by cause of action estoppel.

40.  Insofar as the 2^nd Defendant was concerned, he was not a party to the DCCJ Action but a witness of the 1^st Defendant. In the present case, the 2^nd Defendant was sued (amongst others) for assisting the 1^st Defendant in breach of contract and conspiracy with the 1^st Defendant.  Applying Kan Wai Chung v Hau Wun Fai, the 2^nd Defendant was the 1^st Defendant’s privy in interest as there was a sufficient degree of identification.

41.  Being privy, the 2^nd Defendant was entitled to rely on the doctrine of issue estoppel as much as the 1^st Defendant. The Plaintiff was bound by Her Honour Judge Tsui’s finding that there was no water dripping at the premises and no breach of the Tenancy Agreement.  Those findings were material facts for the assisting breach of contract claim and conspiracy claim. 

42.  Similarly, those 2 claims against the 2^nd Defendant could and should have been raised in the DCCJ Action.

43.  It was clear abuse for the Plaintiff to run the same claims in Court of First Instance when there was a final judgment in the DCCJ Action against him. Those claims were a collateral attack on the Judgment after the Plaintiff had exhausted all avenues of appeal.  The claims (apart from defamation) against the Defendants were frivolous or vexatious in that they could not possibly succeed for reasons of res judicata and hence abuse of process.  The causes of action should be struck out.

I.     Defence of absolute privilege

44.  Separately, the defamation claim against the 1^st Defendant was founded on the 1^st Defendant’s defence filed in the DCCJ Action.  That against the 2^nd Defendant was founded on his witness statement and oral testimony in the same action.  Applying Wong Shui Kee Roger, both defamation claims fell within the ambit of absolute privilege and were unsustainable in law.  They should thus be struck out for no reasonable cause of action.

J.     Conclusion and costs

45.  The summons was procedurally wrong.  An appeal against Master J Wong’s order was out of time.  In any case, the statement of claim disclosed no reasonable cause of action in defamation and it was an abuse of process to re-litigate other claims.  The summons is dismissed.

46.  The claims were an abuse of process.  This summons has no merits.  The Plaintiff should bear costs on indemnity basis.  I summarily assess the Defendants’ costs at $40,000.  I make an order nisi on costs accordingly.

47.  I thank Mr Ng for his assistance.