YUEN OI YEE LISA v. HEATH CO LTD

HCA 96/2005

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

ACTION NO. 96 OF 2005

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J U D G M E N T

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1.  This is the Defendant’s application to strike out the statement of claim and dismiss the present action.

2.  The Plaintiff was at one time employed by the Defendant.  Arising from her departure from the Defendant, many actions have been commenced in courts and complaints made to the Office of the Privacy Commissioner for Personal Data as well as the Equal Opportunities Commission (EOC).  Ms Lam, appearing for the Defendant in this application, has very helpfully prepared a two-page colour chart setting out the various actions that have been commenced by the Plaintiff against different parties including the Defendant and what has happened to those actions.  A copy of the chart, the contents of which are self-explanatory, is annexed to this judgment.  I will therefore not spend further time on the background of the present case, save where it is absolutely necessary.  The background facts are well known to the parties themselves.

3.  I will turn straight to the statement of claim.  Paragraphs 1 to 8 merely set out the background, i.e. the short period of employment of the Plaintiff by the Defendant and the termination of her employment following allegedly defamatory statements made against her.  Paragraphs 9 to 19 of the statement of claim plead specifically the making of the allegedly defamatory statements. 

4.  These are not new matters.  They have been raised in previous actions.  In particular, in DCCJ 5441/2003, a privacy claim, the same subject matter of defamation – which was said to be the responsibility of a Ms Sally Chong and a Mr Lai, both then in the employ of the Defendant – was raised as a main issue between the parties.  The Plaintiff here was the plaintiff in that action and the present Defendant was the 1^st defendant there. 

5.  The privacy claim was struck out by Her Honour Judge C B Chan on the basis that there had been a full and final settlement regarding the allegedly defamatory statements.  Under the settlement, the Defendant offered a written apology and paid the Plaintiff a sum of $20,000.  The judge held that the privacy claim was precluded by the settlement agreement, which was binding on the Plaintiff.

6.  Having unsuccessfully sought leave to appeal from the judge’s decision, the Plaintiff applied to the Court of Appeal for leave to appeal (HCMP 2038/2004).  That application was heard by the Court of Appeal on 8 March 2005, and judgment was given on 18 March 2005.  The court dismissed the application for leave. 

7.  In the course of his judgment, Tang JA said that the court was satisfied that the settlement evidenced by the relevant correspondence covered any claim which the Plaintiff had or might have had against the Defendant in relation to the contacts made by Sally Chong on behalf of the Defendant with the three ex-employers of the Plaintiff, which gave rise to the allegations of defamation (paragraph 14).

8.  In those circumstances, it is clear to me that insofar as paragraphs 9 to 19 of the present statement of claim seek to plead a freestanding cause of action based on defamation against the Defendant, it is squarely caught by what has been decided by the District Court and the Court of Appeal in the previous proceedings just described.

9.  In other words, insofar as the Plaintiff seeks to re-litigate the same question of defamation in this action, that is not allowed under the general principle of issue estoppel (Hong Kong Civil Procedure 2004, Vol. 1, para.18/19/11), and the claim is therefore an abuse of the process of the court.

10.  In any event, as has been confirmed by the Court of Appeal, the settlement agreement is binding on the Plaintiff.  Insofar as she seeks to sue on defamation against the Defendant in the present action, the claim is bound to fail.  It should therefore also be struck out as being a frivolous or vexatious claim.

11.  But perhaps to be fair to the Plaintiff, if I have not misunderstood what she said during the hearing, she does not rely on paragraphs 9 to 19 as constituting a freestanding cause of action based on defamation as such.  Rather, those paragraphs should be read together with the subsequent paragraphs in the statement of claim, where she deals with the settlement agreement and its setting aside, in order to fully understand what she is suing on in this action.  So to these subsequent paragraphs I now turn.

12.  Paragraphs 20 to 33 plead several matters which the Plaintiff alleges give her the right to set aside the settlement agreement, and thus to sue on the allegedly defamatory statements which is otherwise debarred by the settlement agreement as explained above.

13.  Paragraphs 21 to 25 relate to 10 witness statements made by staff members of the Defendant, which were obtained by the Defendant and supplied to the EOC in response to an investigation by EOC into a sex discrimination complaint made by the Plaintiff against the Defendant relating to her dismissal.  In short, the Plaintiff says that under the settlement agreement, the Defendant has promised to use its “bestendeavours to restrain any defamatory statement to be made against [the Plaintiff] by any of [the Defendant’s] staff”.  By procuring the 10 witnesses who were staff members of the Defendant to make the witness statements and by supplying the statements to the EOC, the Plaintiff says the Defendant has breached the settlement agreement.

14.  In my judgment, this does not support a case for setting aside the settlement agreement.

15.  First, as has been held by Tang J (as he then was) in HCA 509/2004 (another related action), those statements supplied to the EOC were privileged statements.  No action based on defamation would lie in relation to the statements.  For that reason, no defamatory statements against the Plaintiff have been made.

16.  Second, those statements were supplied by the Defendant to the EOC pursuant to its request by letter dated 2 August 2003: see particularly request items 6, 7, 10 to 12.  Section 5 of the Sex Discrimination (Investigation and Conciliation) Rules (Cap. 480) provides that the EOC may for the purposes of investigating into a complaint by a notice in writing served on a person require that person to furnish such information as specified in the notice, and that any person who, without reasonable excuse, refuses or fails to comply with the notice commits an offence and is liable on conviction to a fine at level 4.

17.  In my judgment, in those circumstances, the Defendant had no choice but to supply the witness statements in response to the notice.  What the Defendant has done, in my view, did not amount to any breach of the relevant term in the settlement agreement, which only obliged the Defendant to use its “best endeavours” to restrain the making of defamatory statements by its staff members.  When the statements were obtained and supplied, in effect, under compulsion of law, there was no breach of promise regarding use of best endeavours.

18.  Third, even if the term had been breached, that would only mean that there was a breach of contract (i.e. the settlement agreement), giving rise to a right to seek relief for breach, such as damages.  It would not revive the settled cause of action based on defamation.  On the materials before me, I do not think it arguable at all that the term constituted a condition subsequent of the settlement agreement.

19.  Finally, the existence of the witness statements was known to the Plaintiff by the time she applied for leave to appeal from Her Honour Judge C B Chan’s decision.  Indeed in her application for leave to appeal, she specifically relied on the witness statements as a ground for saying that the settlement agreement was liable to be set aside, and therefore she could still sue in defamation.  As mentioned above, the judge refused her application for leave.  Although no written decision was given, it must have been implicit in the refusal of the application that the judge did not accept the Plaintiff’s argument.

20.  In the Plaintiff’s application for leave to appeal before the Court of Appeal, she did not rely on the same argument anymore, and therefore the Court of Appeal need not and did not deal with it.

21.  Given those facts, I am of the view that the present argument is a matter which could and should have been raised (and was indeed so raised at one stage) in DCCJ 5441/2003 and HCMP 2038/2004.  Insofar as it had been raised (and rejected), it can no longer be raised now by reason of issue estoppel.  Insofar as it could and should have been raised (before the Court of Appeal) and was not so raised, it cannot be raised now by reason of the doctrine of res judicata in its wider sense: Yat Tung Investment Co. Ltd v. Dao Heng Bank Ltd [1975] AC 581; Johnson v. Gore Wood and Co. [2002] 2 AC 1.

22.  In short, even if, which is not my view, the witness statements, though not actionable, were nonetheless “defamatory statements” within the meaning of the settlement agreement, even if the term in question was a condition subsequent of the settlement agreement, and even if somehow the Defendant had failed to use its best endeavours to prevent the making of those statements by its staff members, I am still of the view that the present ground cannot be argued or relied on as a ground to set aside the settlement agreement.

23.  Paragraphs 26 to 28 relate to two further witness statements which were initially supplied by the Defendant to the EOC but were subsequently retracted.  They were revealed to the court in HCA 509/2004 in an affidavit filed on behalf of the Defendant in that action.

24.  The Plaintiff pleads that those two statements were defamatory, and the Defendant has therefore breached the term in the settlement agreement about using its best endeavours to restrain staff members from making defamatory statements.

25.  Again I do not think this is an arguable ground to set aside the settlement agreement.

26.  It is clear beyond argument to the contrary that whether as statements supplied to the EOC or as exhibits to an affidavit filed for the purposes of proceedings in the High Court action (HCA 509/2004), the statements were privileged from a libel suit.  They were not actionable.  For reasons explained above, they were not “defamatory statements”.

27.  Furthermore, I do not believe that there was a breach of the promise to use best endeavours.  They were exhibited to the affidavit in question in order to explain to the court what statements had been supplied to the EOC.  It would be quite misleading not to inform the court about these two statements even though they had been subsequently retracted.  I do not think, in those circumstances, there was a breach of the promise to use best endeavours in exhibiting the two statements to the affidavit.

28.  Moreover, the point made above that the term in question was not a conditional subsequent also applies here.

29.  Finally, the two additional statements had been known to the Plaintiff by the time she applied for leave to appeal from the Court of Appeal in HCMP 2038/2004.  It could and should have been relied on by her to say that the settlement agreement was liable to be set aside and thus not binding on her in support of her application for leave before the Court of Appeal.  She did not do so.

30.  In those circumstances, it is simply not right to allow her to raise the argument in the present action.  The doctrine of res judicata in its wider sense applies.

31.  Paragraph 28 of the statement of claim pleads the refusal or failure of the Defendant to reveal to her the identity of two of the three ex-employers whom Sally Chong had contacted.  It does not provide any ground for setting aside the settlement agreement.

32.  Paragraphs 29 to 31 relate to the making of an allegedly threatening call to a potential employer of the Plaintiff and the refusal to review the identity of the two ex-employers in question. The matters pleaded do not support any case for the setting aside of the settlement agreement at all.

33.  Paragraphs 32 and 33 deal with the Plaintiff’s discovery of the contents of a telephone conversation between Sally Chong and one of the ex-employers.  The matter is entirely covered by the settlement agreement.  It does not give rise to any ground for setting aside the settlement agreement.

34.  Paragraphs 34 to 40 deal with the alleged loss and damage suffered by the Plaintiff and miscellaneous matters.  In my view, they do not provide any ground for setting aside the settlement agreement or set out any viable cause of action.

35.  A number of “exhibits” are annexed to the statement of claim.  They do not provide any arguable cause of action either.

36.  In those circumstances, I have no hesitation whatsoever to strike out the present statement of claim on the ground that the claim is frivolous or vexatious, or is otherwise an abuse of the process of the court.

37.  The Plaintiff’s cross application by summons to join Mr Lai as a 2^nd defendant has no merit, particularly given my dismissal of the claim against the Defendant.  It is dismissed.  (Her application to adjourn the hearing of the strike-out application made under the same summons was refused by me at the hearing.)

38.  Given the history of the matter, I think there is a prima facie case for the making of a restricted proceedings order against the Plaintiff.  I understand that such an application has been made in the District Court, which is still pending.  But any such order that may be made by the District Court will not be effective in relation to proceedings commenced in the High Court.

39.  On the other hand, I understand that the Secretary for Justice has applied for an order under section 27 of the High Court Ordinance (Cap. 4) relating to vexatious litigants against the Defendant.  The application is handled by Lam J and the matter is returning to his Lordship for hearing on 20 December 2005. 

40.  Of course, if a section 27 order is made against the Plaintiff, there is no need for a restricted proceedings order (whether in the High Court or the District Court).  However, if for any reason the court does not see fit to make a general section 27 order, it might find it necessary or desirable to consider making a restricted proceedings order against the Plaintiff.

41.  Needless to say, the court can of its own motion consider making a restricted proceedings order against a vexatious litigant, even in the absence of a specific application by the opposite party to the relevant proceedings.  But an opportunity to be heard must be given to the plaintiff.

42.  In those circumstances, I think it best to direct that the hearing of whether to make a restricted proceedings order against the Plaintiff (of the court’s own motion) be held before Lam J on 20 December 2005.  For that purpose, I give leave to the Defendant to file and serve evidence if it so wishes, in support of such an order within 14 days from the date this judgment is handed down and generally to take part at the hearing on 20 December 2005, again if it so wishes.  I also give leave to the Plaintiff to file and serve evidence in opposition to such an order within 14 days after the expiry of the time limited for the Defendant to file evidence (if no such evidence is filed), or 14 days after the service of such evidence on her if such evidence is filed within the time given, whichever is earlier. 

43.  The Plaintiff will of course be heard at the hearing on 20 December 2005 regarding whether any such restricted proceedings order should be made against her.  Needless to say, that would be in the alternative to the Secretary for Justice’s application for a general section 27 order against the Plaintiff. 

44.  I further give the parties liberty to apply for further directions relating to the making of such a restricted proceedings order from either this Court or Lam J.

45.  I further order that save for the consideration of making a restricted proceedings order against the Plaintiff, the present action shall stand dismissed. 

46.  I also give the costs of the action, including the present strike-out application and the Plaintiff’s cross summons, to the Defendant.  The Plaintiff has indicated at the hearing that in case the application to strike out should be successful (which is indeed the case), she does not oppose the making of an adverse costs order on an indemnity basis against her.  With or without her concession, I am of the view that the facts of the present case and the whole history of the matter fully justify the award of indemnity costs against the Plaintiff.  I therefore order that failing agreement on costs, the same be taxed on an indemnity basis.

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