CHAN CHUN CHUEN v. KAO, LEE & YIP (a firm)

HCA 597/2015

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

ACTION NO 597 OF 2015

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DECISION

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A. INTRODUCTION

1.  This is the Defendant’s application to strike out the Plaintiff’s Statement of Claim filed on 16 June 2015.  For this application, the Plaintiff is represented by Mr Sean Li (who is not the pleader of the Statement of Claim); whereas the Defendant is represented by Ms Audrey Eu SC, leading Mr Justin Lam.

2.  In the Summons taken out on 8 May 2017, the Defendant seeks to strike out the Plaintiff’s claim on the basis that it discloses no reasonable cause of action, and/or that it is vexatious or an abuse of process.

3.  In her written and oral submissions, Ms Eu SC argues the striking out application solely on the ground of abuse of process[1].  The gist of Ms Eu’s complaint of abuse of process is that the Plaintiff in this action adopts a position which is “fundamentally inconsistent with and diametrically opposite to” the position adopted by him in a previous set of judicial review proceedings, namely HCAL 76/2010 (the “JR Application”).

4.  In order to determine the validity of Ms Eu’s objection, it is necessary to set out the background of HCAL 76/2010, followed by the Plaintiff’s claim and allegations in this action.

B.  THE JR APPLICATION (IE HCAL 76/2010)

5.  In the JR Application, the Plaintiff sought judicial review of the decision of the Commissioner of Inland Revenue (the “Commissioner”) in refusing extension of time for the Plaintiff to object to some property tax and profit tax assessments.

6.  At the material time, the property tax and profit tax assessments in question were sent to the Defendant’s address.  The Defendant is a firm of solicitors, and the Plaintiff had engaged the Defendant as his solicitors for conveyancing matters.  Those tax assessments were sent to the Defendant’s address because in July 2004, the Plaintiff had given such address as his postal address in his Profits Tax Return for 2003/04.

7.  The Plaintiff alleged that he did not receive the tax assessments in question, and he only became aware of them when he heard a news report about them over television.  Later, the Plaintiff instructed his lawyers to contact the Inland Revenue and was provided with copies of the tax assessments.  However, when the Plaintiff sought to object to them, the Commissioner rejected his objections on the basis that such objections had not been received within the one‑month time limit, and that she was not satisfied that there was reasonable cause preventing the Plaintiff from objecting in time.

8.  In challenging the Commissioner’s refusal to extend time for the Plaintiff’s objections in the JR Application, the Plaintiff contended that under the relevant provisions in Inland Revenue Ordinance (Cap 112) (“IRO”), the duty of the Commissioner to give notice of assessment meant that the Commissioner must establish actual receipt of the assessment by the Plaintiff, and/or to act on the information known to him to give such notice in such manner most likely to bring the assessment to the actual notice of the Plaintiff [2].  Further, the Plaintiff also contended that lack of actual knowledge of the assessment by the Plaintiff was a factor which the Commissioner should take into account in deciding whether or not to extend time for objection[3].

9.  For reasons that I do not need to go into details, the JR Application was allowed by Mr Justice Reyes but was subsequently dismissed by the Court of Appeal upon the appeal brought by the Commissioner.

10.  For the present purposes, it is pertinent to observe that in the JR Application, the case run by the Plaintiff was that there was no retainer with the Defendant for the service of tax assessments and the Defendant’s address was ineffective for such purpose.

11.  In this regard, Ms Eu SC helpfully draws my attention to para 56(d)(iii) – (iv) of the Amended Form 86 filed in the JR Application in which the Plaintiff alleged that:

“the [Commissioner] failed to have regard to and/or give any weight and/or give due weight to …

(iii) [the Defendant] had never been appointed as the Applicant’s taxation representative or agent for the purposes of the Ordinance; and

(iv) there was no evidence whatsoever of a retainer subsisting between [the Defendant] and [the Plaintiff] for the service of important legal documents such as notices of tax assessments (and in fact there was no such retainer).”

12.  Further, Ms Eu SC also highlights various parts of the written and oral submissions made by Mr Philip Dykes SC, the counsel appearing for the Plaintiff in the JR Application, to Mr Justice Reyes and the Court of Appeal in which Mr Dykes SC described the Defendant’s address as “stale”, “ineffective” or “a dud” for the service of legal documents on the Plaintiff, and that “there was indeed no such retainer” between the Plaintiff and the Defendant.

13.  As it will be further elaborated below, Ms Eu SC argues that the position taken by the Plaintiff in the JR Application regarding his relationship with the Defendant was “diametrically opposite” to the position taken by him in the present action.

14.  Before I move on to set out the Plaintiff’s case and allegations in this action, it is necessary for me to point out a matter of significance. 

15.  In the body of the Amended Form 86 filed by the Plaintiff in the JR Application (at para 33 thereof), the Plaintiff did make reference to a letter dated 6 July 2010 issued by the Defendant, in which the Defendant confirmed that there was an “informal arrangement” whereby the Defendant’s staff would contact the Plaintiff’s agents when any letter was sent to the Defendant’s office for the Plaintiff’s attention (the “Informal Arrangement”). The Informal Arrangement was also referred to in the Affirmation of Kan Ming Wan Patty and the Affirmation of Chan Chun Hung Bobby filed in the JR Application, and alluded to in the counsel submissions made on behalf of the Plaintiff in the JR Application.

16.  Hence, the position taken by the Plaintiff in the JR Application was that whilst there was no retainer between the Plaintiff and the Defendant for the service of documents, there was the Informal Arrangement in place which unfortunately did not result in the tax assessments in question being brought to the Plaintiff’s attention[4].

C.  PLAINTIFF’S ALLEGATIONS IN THIS ACTION

17.  In this action, the Plaintiff claims damages for breach of duty of care and/or fiduciary duty owed by the Defendant to him (the “Duties”).  The Plaintiff alleges that the Defendant was in breach of those duties by failing to bring to his notice the existence of those tax assessments, which form the subject matters of the JR Application.

18.  The matters on which the Plaintiff seeks to rely to fix the Defendant with the Duties are pleaded in paras 4 to 6 of the Statement of Claim, which are set out in full as follows:

“4. By an agreement between the Plaintiff and the Defendant (in particular via Mr Yip Wan Tak) concluded orally in or around mid‑1993 and/or to be inferred from conduct between the Plaintiff and the Defendant (in particular via Mr Yip Wan Tak) since around mid‑1993, the parties agreed on the following terms (‘Agency Agreement’):

4.1 The Defendant would provide its postal address from time to time including the Defendant’s Address, as a care of (ie ‘c/o’) address to receive documents sent to the Plaintiff including, but not limited to tax assessments and tax returns and companies documents for and on behalf of the Plaintiff;

4.2 The Plaintiff would continue to retain the Defendant in respect of the matters including those conveyancing [sic] matters set out in paragraph 3 hereinabove;

4.3 The Defendant would bring to the notice of the Plaintiff, via his agents including Mr Chan Chun Hung Bobby (since around 1993) and/or Ms Kam Ming Yan Patty (since around 2001), of any documents received for and on behalf of him immediately or within a reasonable time; and

4.4 The Plaintiff thereafter arrange couriers or persons to collect the said documents received for and on behalf of him.

5.   Further and/or alternatively:

5.1 The Defendant had voluntarily assumed to act for the Plaintiff for the matters set out in paragraphs 4.1 and 4.3 hereinabove;

5.2 The Plaintiff had foreseeably placed trust and confidence and relied on the Defendant (whether as an agent or as a firm of solicitors) for the matters set out in paragraphs 4.1 and 4.3 hereinabove;

5.3 The Defendant was and is aware of the fact that the Plaintiff had so placed reliance on it for the matters set out in paragraphs 4.1 and 4.3 hereinabove;

5.4 The Defendant was and is also aware that if the Defendant did not inform the Plaintiff of any incoming documents in accordance with paragraph 4.3, the Plaintiff would not have known the receipt and/or existence of such documents and act accordingly.

6.   Further and/or alternatively, in the circumstances and by the matters set out in paragraph 5 the Defendant is now estopped above to deny the existence of the agency relationship between the Defendant and the Plaintiff for the matter set out in paragraph 4 above.”

19.  In relation to the Plaintiff’s allegation that the Agency Agreement was concluded orally in mid‑1993, the Defendant served two rounds of requests for further and better particulars requiring the Plaintiff to give full particulars as to how the Agency Agreement was orally concluded. 

20.  In response to such requests, the Plaintiff gave detailed narratives of the meeting at which the Agency Agreement was allegedly concluded, including the time of the day of the meeting, the gist of the words spoken by those who were present at the meeting, etc.

D.  THE APPLICABLE LEGAL PRINCIPLES

21.  The Defendant contends that the Court would not permit a litigant to abuse the process of the court by bringing the administration of justice into disrepute.

22.  In the context of this particular case, Ms Eu SC argues that there is a wealth of authorities supporting the proposition that it is an abuse of process for a litigant to advance two cases in separate legal proceedings that are plainly inconsistent and incompatible with one another.

23.  Ms Eu SC helpfully refers me to the decision of Kwan J (as she then was) in Re Shun Tak Holdings Ltd [2009] 5 HKLRD 743. 

24.  In Re Shun Tak, Kwan J was called upon to decide an application to strike out an unfair prejudice petition on various grounds.  One of the striking‑out grounds was that the petitioners’ case pleaded in the petition was inconsistent with the position taken by them in a set of existing legal proceedings in Macau.  In the Macau proceedings, the petitioners sought to challenge the validity of certain shareholding in the company; whereas in the petition, the petitioners asked the Hong Kong Court to assume that such shareholding was valid.

25.  Kwan J (at para 87 of her judgment) referred to the following dicta of Mortimer J (as he then was) in Berthier Godown Ltd v E Wah Realty Ltd[1986] HKC 8 (at pp 14H – 15A):

“It is that if the party seeks to raise new matters in separate proceedings or seeks to reverse a previous assumption that has been the basis of earlier proceedings in new proceedings, that amounts, first of all, to an abuse of process and second, he is estopped from doing do. A fortiori, this must be so if the earlier proceedings are still in existence and the party can raise those matters in the proceedings which have already been started and in which orders have already been made. He certainly cannot seek to raise factual and legal issues in conflict with his earlier stance and the earlier order of the court. He must pursue all the remedies available to him and raise all the arguments that are available to him in the first proceedings.”

26.  Kwan J (at paras 89 – 90 of her judgment) considered that the above dicta in Berthier Godown was also applicable to the case before her, and concluded that it was an abuse of process for the petitioners to adopt a stance inconsistent with that in the proceedings in Macau in respect of the issue concerning the validity of the shareholding in question.

27.  The other case referred to by Ms Eu SC, which bears more resemblance to the present one, is the Canadian decision of Mystar Holdings Ltd v 247037 Alberta Ltd [2009] ABQB 480.

28.  In Mystar, the plaintiff sued the defendants for 100% interest in a hotel purchased pursuant to a joint venture agreement.  The defendants argued that the plaintiff had abused the legal process by adopting a position that was inconsistent with the position taken by it in a previous action where it asserted that it had lost 50% interest in the hotel. 

29.  In dealing with the defendants’ objection, Brooker J made the following observations:

“ [44] I agree that an applicant who alleges that certain pleadings constitute an abuse of process bears a heavy burden. I also agree with the Court’s comments in Brewers Distributors that it must be plain and obvious that the claim amounts to an abuse of process of the court before it can be struck [out].

…

[46] I agree with the Ontario Court of Appeal that ‘abuse of process is essentially a fairness doctrine’. The Court must also ask itself whether, in the circumstances, it would be fair to allow the action in question to proceed.

…

[49] In general, I am persuaded that a party is not free to deliberately argue diametrically inconsistent facts in various actions, thus knowingly advancing irreconcilable positions which are not articulated as alternative claims. Whether this pronouncement has any application to the facts of this case remains to be determined.

…

[53] I am in agreement with the Court’s finding in Chevron that in certain circumstances, taking contrary positions on the same issue in separate proceedings may constitute an abuse of process and that ‘what constitutes an abuse of process may vary with the circumstances of each case’.

…

[62] The doctrine of abuse of process assists in promoting the ‘integrity of the administration of justice’. On the facts before me, [the plaintiff], with full knowledge of the facts, should not be able to advance a claim that is diametrically opposed to its earlier position. In these circumstances, the integrity of the justice system would be no less compromised simply because the initial claim was not followed th[r]ough to judgment.

[63] This does not mean, as [the plaintiff] suggests, that a factual pleading will forever and irrevocably bind a party in all subsequent pleadings.  Rather, it means that, if a party, with full knowledge of the facts (thus distinguishing itself from a Potter scenario) chooses to argue irreconcilable facts in its pleadings, and where such pleadings are clearly not made in the alternative, allowing such a party to continue pursuing an incompatible claim may constitute an abuse of process.”

(emphases added)

30.  The legal propositions that this Court can derive from the decision of Brooker J in Mystar can be summarized as follows:

(1) A party who seeks to strike out a claim based on an abuse of process bears a heavy burden.  The Court will only do so in a plain and obvious case.

(2) The doctrine of abuse of process is essentially a “fairness doctrine”.

(3) It may be an abuse of process for a party, with full knowledge of the facts, to advance a claim that is diametrically opposed to its position taken in an earlier set of proceedings.  What constitutes an abuse of process may vary with the circumstances of each case. 

(4) In this type of case, the abuse lies in its effect on the “integrity of the administration of justice”.  Where a party with full knowledge of the facts advances a claim which is diametrically inconsistent with his allegations in previous proceedings, the integrity of the justice system would be no less compromised simply because his previous allegations were not followed through to judgment.

31.  Mr Li submits that a party is not bound by his inconsistent statements made in previous proceedings, and he does so by placing reliance on the principle accepted by the Court of Appeal in New Technology Cable Ltd v Popbridge Industrial Ltd CACV 50/2000 (3 May 2000)that an admission in a pleading is not binding in a subsequent action.

32.  In my judgment, a distinction has to be drawn between a party admitting an allegation made by his opponent in previous proceedings, and a party taking the initiative to advance a diametrically inconsistent allegation in previous proceedings. 

33.  In the former scenario, the allegation was not positively put forward by the party, and once admitted, would become a non‑issue.  However, in the latter scenario, the allegation was positively advanced by the party, and once advanced, would require the opponent and the Court to look into the allegation.  When the party advances an inconsistent allegation in a subsequent proceedings, the latter scenario (but not the former) would result in a negative effect on the administration of justice and may, in the circumstances of a particular case, lead to an abuse of process.

34.  Hence, I do not think one can derive the general proposition that a party is at liberty to run inconsistent cases in different proceedings from the principle that an admission in one action is not binding in subsequent actions.  

35.  Mr Li further submits that Mystar is an authority of minimum persuasiveness since it is only a first instance decision made by the Alberta Court.  Whilst I agree that Mystar is no more than a persuasive authority, I am unable to see any reason why the Court should refuse to follow it.  In my judgment, those legal propositions summarized in para 30 above are correct as a matter of principle.

36.  To a certain extent, those principles are also in line with the ruling of Kwan J in Re Shun Tak, and more significantly, the dicta of Ma CJ in Ko Hon Yue v Chiu Pik Yuk (2012) 15 HKCFAR 72.

37.  Ko Hon Yue is a decision touching on what is commonly known as the Henderson v Henderson abuse (ie a party ought generally not to be permitted to raise in subsequent proceedings matters which that party could and should have raised in earlier proceedings).  In discussing the doctrine, Ma CJ observed (at para 83) that:

“ (1) The starting point is to recognize that the doctrine is founded on an abuse of process. As Lord Wilberforce said in Brisbane City Council v A‑G for Queensland, ‘it ought only to be applied when the facts are such as to amount to an abuse: otherwise, there is a danger of a party being shut out from bringing forward a genuine subject of litigation’….

…

(4) The abuse can also take the form of administration of justice being brought into disrepute: see Chiang Lily, 256D–G ([58]) referring to Hunter v Chief Constable of the West Midlands Police [1982] AC 529. With the procedural reforms introduced by the Civil Justice Reform in 2009, the courts in Hong Kong must now, when exercising their procedural powers, increasingly bear in mind not just the parties before them in any particular litigation but also the position of other litigants in the court process. RSC O.1A r.1(f) states as one of the underlying objectives of the court’s procedural powers under the Rules to be ‘to ensure that resources of the courts are distributed fairly’.

(5) In examining aspects such as abuse, the court is concerned with balancing interests: not just those of the litigants before it, but also taking into account the other interests involved in the administration of justice.  It is important therefore here to emphasise that when the court is dealing with the Henderson v Henderson type of abuse, it is not looking at an absolute bar to litigation such as issue estoppel or cause of action estoppel.  On the contrary, in considering this type of abuse, the court is required to assess a number of factors and balance competing interests. …”

38.  Although Ma CJ’s dicta was expressed in relation to the Henderson v Henderson type of abuse, it is in my view equally applicable to other forms of abuse, including the abuse of running a case which is diametrically inconsistent with that in previous proceedings.  

39.  At the end of the day, the ultimate question is whether, having assessed various factors and balanced competing interests, it is plain and obvious to the Court that the bringing or defending of a claim is an abuse of process. 

40.  In my view, it does not matter whether the abuse is described as “bringing the administration of justice into disrepute” or “undermining the integrity of administration of justice”.  As Stone J observed in the Court of Appeal decision of The New China Hong Kong Group Ltd (in liquidation) v AIG Asian Infrastructure Fund LP [2005] 1 HKLRD 383, para 67:

“‘Abuse of process’ means what it says. Practising lawyers tend to have a feel for what it connotes. Perhaps it is like an elephant: difficult to describe, but you know it when you see it.”

E.  DISCUSSIONS

41.  In light of the legal principles discussed above, the two main issues which I need to consider are:

(1) Whether the Plaintiff’s case in this action (or any part thereof) is “diametrically inconsistent” with his case in the JR Application; and

(2) If “yes”, whether having assessed various factors and balanced competing interests, it is an abuse of process in the circumstances. 

I can only make a striking‑out order if I am satisfied that it is plain and obvious that the two issues identified in the foregoing paragraphs are answered in the affirmative.

E1.  Diametrically inconsistent?

42.  In her written submissions (at para 13), Ms Eu SC submits that the following pleas in the Statement of Claim run directly contrary to the Plaintiff’s case in the JR Application:

(1) Statement of Claim, para 4:

“ By an agreement between the Plaintiff and the Defendant (in particular via Mr Yip Wan Tak) concluded orally in or around mid‑1993 … the parties agreed on the following terms (‘Agency Agreement’) …”

(2) Statement of Claim, para 5.2:

“ The Plaintiff had foreseeably placed trust and confidence and relied on the Defendant … for the matters set out in paras 4.1 and 4.3 hereinabove.”

43.  Notably, Ms Eu SC does not suggest that the plea in para 4 of the Statement of Claim that an agreement “to be inferred from conduct between the Plaintiff and the Defendant (in particular Mr Yip Wan Tak) since around mid‑1993” runs contrary to the Plaintiff’s case in the JR Application.  Ms Eu SC is plainly right in not making such suggestion since, as pointed out above, reference was in fact made to the existence of the Informal Arrangement in the JR Application. 

(a) Oral agreement between the parties

44.  I will consider each of these pleas identified in para 42 above in turn.

45.  As to the plea that there was an oral agreement concluded in mid‑1993 between the parties, I agree with Ms Eu SC that such plea is “diametrically inconsistent” with the Plaintiff’s case in the JR Application.

46.  The contents of the Amended Form 86 filed by the Plaintiff in the JR Application made it clear that there was no retainer subsisting between the Plaintiff and the Defendant for the service of legal documents.  This is inconsistent with the Plaintiff’s case in this action that there was an oral agreement concluded between the parties in mid‑1993. 

47.  The inconsistency is all the more alarming when the Plaintiff, upon the Defendant’s requests, has in this action provided detailed particulars as to the oral discussions leading to the conclusion of the alleged oral agreement.  If there were those discussions, the Plaintiff could not have stated in positive terms in his JR Application that there was no retainer between the Plaintiff and the Defendant.

48.  I note that the Plaintiff alluded to the Informal Arrangement in the JR Application.  I do not, however, think that the Plaintiff’s reference to the Informal Arrangement in the JR Application could explain the inconsistency between the absence of a retainer and the existence of an alleged oral agreement.

49.  In the JR Application, no particulars were given as to how the Informal Arrangement came about.  In particular, it was never alleged by the Plaintiff in the evidence that the Informal Arrangement was, or at least akin to, the alleged oral agreement.

50.  In this action, according to the particulars provided by the Plaintiff, the alleged oral agreement was reached between the Plaintiff and Mr Yip Wan Tak of the Defendant at the Defendant’s office in mid‑1993 whereby Mr Yip expressly agreed with the Plaintiff that the Defendant’s address would be used for receiving the Plaintiff’s legal/tax documents, and that he even specifically instructed one Mr Raymond Chu of the Defendant to handle such matters[5].  Although the alleged oral agreement was not reduced into writing, it is quite inconceivable for one to describe what (allegedly) had been expressly agreed with a lawyer as an “informal arrangement”.

51.  In my view, it is plain that such Informal Arrangement is very different from what is alleged to be the oral agreement in this action.  Instead of supporting the alleged oral agreement, the reference to the Informal Arrangement in the JR Application, coupled with the positive assertion of there having been no retainer, flatly contradict the existence of the alleged oral agreement.

52.  Mr Li does not strongly argue that there is no inconsistency.  He, however, contends that the principle should only be applied to diametrical inconsistency as to fact. Since, as so contended by Mr Li, that whether a party is an agent is a matter of law, the Plaintiff cannot be said to have knowingly run inconsistent cases as to fact on this issue.  

53.  In support of his argument, Mr Li refers to various authorities (including Garnac Grain Co Inc v H.M.F. Faure & Fairclough Ltd [1968] AC 1130 at 1137B–C and First Good International Ltd v Shum Kin & Ors HCA 614/2004 (9 May 2005), paras 22 – 28) to support the proposition that whether a relationship is a principal and agent relationship is a question of law, and that it matters not whether the parties recognize it.

54.  Although the legal proposition advanced by Mr Li is clearly right, it is in my judgment beside the point. 

55.  No relationship can exist in vacuum.  In fact, in the authorities cited in para 53 above, the judges also emphasized that “the relationship of principal and agent can only be established by the consent of the principal and the agent”.  Hence, facts as to how such consent came about are those facts which a party has to plead and prove in order to establish a case of agency.  The Defendant’s objection here is that the facts which are said by the Plaintiff to give rise to a principal and agent relationship in this action are diametrically inconsistent with those previously asserted by him in the JR Application. What Mr Li seeks to argue does not address such objection.    

56.  For the above reasons, I find that the plea in this action that there was an oral agreement concluded in mid‑1993 between the Plaintiff and the Defendant is diametrically inconsistent with the Plaintiff’s case and allegations advanced in the JR Application.

(b) Trust and confidence placed by the plaintiff / duties owed by the defendant

57.  The other complaint of the Defendant is that the plea in the Statement of Claim that the Plaintiff placed trust and confidence in the Defendant is directly contrary to his case in the JR Application.

58.  As a starting point, I observe that, unlike his position on the existence of a retainer, the Plaintiff in the JR Application did not state or assert that he placed no trust and confidence in the Defendant in bringing to his attention legal or tax documents sent to the Defendant’s address.  In fact, the Plaintiff in the JR Application mentioned the existence of the Informal Arrangement, but asserted that such arrangement did not result in the tax assessments being brought to his attention.

59.  In her written submissions, Ms Eu SC refers to the descriptions or comments made by the Plaintiff’s counsel in the JR Application that the Defendant’s address was “stale” or “a dud” for the service of documents on the Plaintiff.  However, as rightly pointed out by Mr Li in his written submissions, these descriptions or comments are not inconsistent with a case that the Defendant was negligent in its handling of the Plaintiff’s legal/tax documents sent to its address under the Informal Arrangement.

60.  The main thrust of Ms Eu SC’s argument (as forcefully developed by her during oral submission) is that although the Informal Arrangement was referred to in the JR Application, the underlying assumption of such proceedings must be that the Informal Arrangement did not give rise to any legal relationship or legal consequences; for otherwise, there would be effective service of the tax assessments on the Plaintiff.

61.  With respect, I am unable to accept Ms Eu SC’s argument.

62.  As it can be seen from the Amended Form 86 filed in the JR Application, the judgment of Reyes J handed down on 1 June 2011 as well as the judgment of the Court of Appeal handed down in CACV 113/2011 on 8 March 2012 (on appeal from Reyes J’s judgment), the focus of the JR Application was whether the provisions in the IRO requires that “actual notice” of the assessments be given to the Plaintiff.  The Plaintiff’s case in the JR Application was that “actual notice” was required such that it was unlawful for the Commissioner to refuse extension of time for the Plaintiff to object to the tax assessments when he had no “actual notice” of the same until a much later date.

63.  Obviously, the Plaintiff’s case vis‑à‑vis the Commissioner in the JR Application was that the Informal Arrangement was ineffective in bringing the tax assessment to his “actual notice” as so required by the IRO.  Such a case is, in my view, not inconsistent with the Plaintiff’s case vis‑à‑vis the Defendant that the Defendant owed a common law or fiduciary duty to bring the tax assessments to the Plaintiff’s attention under the Informal Arrangement.

64.  The issues concerning the statutory requirements of the IRO are very different from the issues as to whether, and if so, what common law or fiduciary duties were owed by the Defendant in the circumstances.  In my view, there is no clear inconsistency for the Plaintiff on the one hand taking the position that there was no effective service of the tax assessments by the Commissioner on him for the purposes of the IRO despite the existence of the Informal Arrangement, and on the other hand taking the position that the Defendant acted in breach of its duties in failing to bring those tax assessments to his attention under the Informal Arrangement.

65.  Hence, I am unable to accept Ms Eu’s submission that the underlying assumption in the JR Application must be that the Informal Arrangement did not give rise to any legal relationship and legal consequences as between the Plaintiff and the Defendant.

66.  For the above reasons, I find the Plaintiff’s allegation that he placed trust and confidence on the Defendant not directly contrary to his case in the JR Application.  Nor am I satisfied that the Plaintiff’s case that the Defendant owed common law or fiduciary duties to him is diametrically inconsistent with his case in the JR Application.

E2.  Abuse of process?

67.  In light of the above discussions, the only allegation in the Statement of Claim that is found by me to be diametrically inconsistent with that in the JR Application is that the assertion that there was an oral agreement concluded the parties in mid‑1993.  The next question is whether it is in the circumstances an abuse of process for the Plaintiff to advance and rely on such assertion in this action.

68.  Amongst other factors, one important factor in determining whether it is an abuse of process is to see whether there is any explanation as to why diametrically inconsistent cases have been advanced by the Plaintiff in different proceedings.  As pointed out by Brooker J in Mystar, it undermines the integrity of the administration of justice if a litigant with full knowledge is allowed to run diametrically inconsistent cases in different sets of proceedings.

69.  There is no question that the Plaintiff has full knowledge of his dealings and discussions with the Defendant.  If there were the alleged oral agreement concluded in mid‑1993, the Plaintiff could have mentioned it in the JR Application; even assuming the Plaintiff and his legal team did not consider it to be necessary to allude to such oral agreement, they should have refrained from making the positive assertion in the Amended Form 86 that there was in fact no retainer between the Plaintiff and the Defendant for service of documents.  At the end of the day, as the applicant in the JR Application, the Plaintiff was required to make and file a supporting affirmation to verify the matters stated in the Amended Form 86 [6]. There is no reason for the Plaintiff or his legal advisers to allow statements, which are known to be false, to find their way into the Amended Form 86.

70.  In his affirmation filed in opposition to this striking out application, the only explanation given by the Plaintiff is as follow:

“9. In the previous judicial review proceedings, my then legal representatives evaluated the law and made the legal submission that there was ‘no evidence … of a retainer’ and ‘in fact no such retainer’. The submission is unfortunately wrong. I have been advised that there is in law, a wealth of evidence that points towards an implied retainer.

10. It is therefore wrong to say that simply because my then representatives said there was no retainer in a previous proceedings, then either there was no retainer as a matter of fact, or that I must have lied.  Whether there was an agency relationship or retainer between the parties is a matter for the Court at the end of the day.”

71.  As rightly pointed out by Ms Eu SC in her written submissions, the Plaintiff’s explanation assumes that he had properly informed his legal advisers in the JR Application of all the facts concerning the alleged oral agreement, and his then legal advisers had come to the “unfortunately wrong” view that there was “no evidence … of a retainer” and “in fact no such retainer”. 

72.  In this regard, I agree with Ms Eu SC that it is wholly implausible for the Plaintiff’s then legal advisers to mislead the Court by making a positive assertion in the Amended Form 86 that “there was in fact no retainer” if they were duly informed by the Plaintiff of the facts concerning the alleged oral agreement.

73.  The hollowness and lack of veracity of the explanation given by the Plaintiff in his affirmation in opposition is further demonstrated by what his counsel told the Court at the hearing. 

74.  At the hearing, Mr Li (after speaking to those instructing him) told the Court that when the JR Application was prepared, the Plaintiff was in jail and he was not asked by his then legal advisers to give particulars concerning the alleged oral agreement. 

75.  This explanation is nowhere to be found in the Plaintiff’s affirmation filed in opposition to this striking out application. More significantly, it is inconsistent with the Plaintiff’s original explanation, which seeks to blame his former legal advisers for coming to the “unfortunately wrong” view based on his instructions.

76.  Accordingly, I am not satisfied that the Plaintiff has given any plausible explanation for his advancing diametrically inconsistent cases in the JR Application and in this action.  To a certain extent, his unsatisfactory explanation lends support to the Defendant’s case that it is an abuse of process for the Plaintiff to advance and rely on the alleged oral agreement in this action.

77.  On the question of abuse, Mr Li submits that there is no abuse of process because:

(1) The issues involved in the JR Application is very different from the issues in this action, and that the question about the existence of agency relationship was not even ruled upon by the courts in the JR Application;

(2) Further, there is also evidence (including the letter dated 6 July 2010 from the Defendant itself) supporting the existence of an agency relationship.

78.  As to the first point, I accept that I would need to take those matters into account in assessing whether there is an abuse of process. However, as pointed out in Mystar, the abuse involved in knowingly running inconsistent cases in different sets of proceedings lies in its effect on the integrity of administration of justice.  Accordingly, such abuse can exist even if a previous inconsistent allegation was not followed through to judgment, particularly when such previous allegation was an allegation of some significance.  In the present case, I am satisfied that matters concerning the relationship and/or arrangement between the Plaintiff and the Defendant on service of documents were matters of some significance in the JR Application.  Hence, I do not give too much weight to the fact that the issues in the two sets of proceedings are different, and that the courts in the JR Application did not rule on the alleged agency relationship.

79.  As to the second point, I tend to agree that there is some evidence to support the existence of the Informal Arrangement, which may be sufficient to establish a case of agency by way of the doctrine of “implied retainer”: HKSAR v Wong Chi Wai (2013) 16 HKCFAR 539, paras 39 – 44.  This is, however, very different from a case that there was an express agency agreement concluded orally back in mid‑1993. Apart from the Plaintiff’s bare assertion (which is inconsistent with what was said in the JR Application), there is in fact no evidence in support of the alleged oral agreement.

80.  In my judgment, this action concerns the duties (if any) owed by the Defendant to the Plaintiff on service of documents at the Defendant’s address; and hence, the precise circumstances giving rise to the agency relationship (if any) are of great significance.  In the absence of any plausible explanation for the Plaintiff’s inconsistent stance and also in the absence of potentially reliable evidence supporting his case on the alleged oral agreement, I find that it is plainly an abuse of process for the Plaintiff to advance and rely on the alleged oral agreement to support his breach of duties claim against the Defendant.

F.  DISPOSAL

81.  For the above reasons, I order that the words “(in particular via Mr Yip Wan Tak) concluded orally in or around mid‑1993” in para 4 of the Statement of Claim be struck out.

82.  Although the Defendant has not successfully struck out the Statement of Claim in its entirety, it has persuaded this Court that the Plaintiff is guilty of abuse of process in seeking to advance and rely on the alleged oral agreement in this action.  Further, I also consider the Defendant to have substantially succeeded in this application by striking out an important allegation in the Statement of Claim.  Hence, I make an order nisi that costs of this application be to the Defendant with certificate for 2 counsel, to be taxed if not agreed.

83.  Finally, I wish to thank counsel for their most helpful submissions in this case.