LAM CHUN LIN v. LEE WAI CHAO AND OTHERS

IN THE HIGH COURT OF HONG KONG

COURT OF FIRST INSTANCE

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JUDGMENT

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Background

1. The Plaintiff claimed against the Defendants damages for the death of Cheung Chi Keung, deceased ("the deceased") as a result of a traffic accident. The deceased was the passenger in a car driven and owned by the 4^th Defendant. This car was involved in a collision with a car owned by the 3^rd Defendant. The Plaintiff alleged that the 1^st or alternatively the 2^nd Defendant was the driver of the car.

2. Apart from the 2^nd Defendant, all the other Defendants filed a defence to the claim. The Plaintiff obtained judgment in default of defence against the 2^nd Defendant.

3. The 3^rd Defendant issued a Contribution Notice against the 1^st, 2^nd and 4^th Defendants seeking a contribution and indemnity in respect of judgment that the Plaintiff may recover against him. The 3^rd Defendant claimed that the accident was caused by the negligence of "the 1^st Defendant or alternatively the 2^nd Defendant and/or 4^th Defendant."

4. The 4^th Defendant issued a Third Party Notice against the 1^st, 2^nd and 3^rd Defendants as Third Parties. The 4^th Defendant claimed against them to be indemnified against the Plaintiff's claim and also damages in respect of his vehicle which was damaged in the accident. In the Third Party Notice the 4^th Defendant adopted the matters pleaded in the Statement of Claim and pleaded that "the said accident was caused or alternatively contributed to by the negligence and/or breach of the common duty of care on the part of the 1^st and/or 2^nd and/or 3^rd Third Parties, their servants or agents".

Application to strike out

5. The 1^st Defendant applied before the Master to strike out (1) the Plaintiff's claim against him, (2) the 3^rd Defendant's Contribution Notice against him and (3) the 4^th Defendant's Third Party Notice against him.

6. The Master acceded to the 1^st Defendant's application in relation to the Plaintiff's claim but declined to make a similar order to strike out the Contribution Notice of the 3^rd Defendant and the Third Party Notice of the 4^th Defendant in relation to the 1^st Defendant. The 1^st Defendant now appeals against the decision relating to the 3^rd and 4^th Defendants.

Basis of application against the Plaintiff

7. The basis of the application by the 1^st Defendant against the Plaintiff is that since the Plaintiff had already entered judgment against the 2^nd Defendant and since the claim against the 1^st Defendant was in the alternative, an election had been made by the Plaintiff who could not thereafter sustain her claim against the 1^st Defendant. The case of Morel Brothers and Co. Ltd v. Earl of West Moreland and Wife [1903] 1KB 64 was relied upon. The Court of Appeal decision was affirmed by the House of Lords ([1904] AC 11.)

8. The case was applied in the Hong Kong decision of Bonus Garment Co. (a firm) v. Karl Rieker Gmbh and Co. K.G. and Another, Civil Appeal No. 153 of 1995. On appeal, the Privy Council declined to determine the question whether the decision in Morel did indeed establish such a wide proposition or was more limited in its scope.

9. As there is no cross appeal by the Plaintiff against the Master's Order, there is no need for me to deal with the decision, other than recognising that the 1^st Defendant is no longer a party to the Plaintiff's claim.

Position of 3^rd and 4^th Defendants

10. The application to strike out was based on O.18, r.19 of the Rules of High Court. No point was taken by the parties that the Contribution Notice and the Third Party Notice were not pleadings within the meaning of the Rules. Although in the summons to strike out, the 1^st Defendant referred to the striking out of the 4^th Defendant's Contribution Notice, in fact the document was a Third Party Notice and not a Contribution Notice. However, Mr. Chong informed the Court that the argument before the Master was on the basis that the 4^th Defendant's Third Party Notice was to be struck out.

11. It is clear that a defendant is entitled to issue and serve contribution notices against co-defendants even though the plaintiff has settled his claim against them and such notices are valid and create a lis between the parties even after the Plaintiff has discontinued the action against those defendants : Harper v. Gray and Walker [1985] 1 WLR 1196, [1985] 2 All ER 507 and R.A. Lister & Co. Ltd v. Thomson (Shipping) Ltd (No.2) [1987] 1 WLR 1614.

12. Likewise in respect of third party notice, if the main action is settled as between the plaintiff and the defendant, the third party proceedings by the defendant against the third party can still proceed in the same way as if they had been started by a separate action and it is not necessary for a new action to be brought: Stott v. West Yorkshire Road Car Co. Ltd [1991] 2 QB 651. Equally the court can and should determine the issue of contribution between co-defendant even after the main action is settled : Note 16/4/1 of the Supreme Court Practice 1997.

13. Mr Chong, Counsel for the 1^st Defendant, however, argued that as a matter of logic if the 1^st Defendant is no longer a party to the proceedings and if the Plaintiff had made an election to pursue against the 2^nd Defendant, then the 3^rd Defendant's Notice of Contribution and the 4^th Defendant's Third Party Notice against the 1^st Defendant would be unsustainable.

14. The matter can be summarised as this : the 3^rd Defendant's contribution claim against the 1^st Defendant is in respect of the judgment that the Plaintiff may obtain against the 3^rd Defendant. The Plaintiff could only succeed against the 3^rd Defendant by establishing (1) the 2^nd Defendant was the driver of the car; (2) the 2^nd Defendant was the servant or agent of the 3rd Defendant; (3) the 2^nd Defendant was driving the car at the time of the accident in the course of his employment with the 3^rd Defendant or according to the instruction of the 3^rd Defendant; (4) the 2^nd Defendant was negligent.

15. Mr Chong submitted that as the Plaintiff had elected to pursue against the 2^nd Defendant by entering judgment against him, she could not establish the claim against the 3^rd Defendant on the basis that the 1^st Defendant was the driver. That being the case, there was no question of the 3^rd Defendant seeking an indemnity against the 1^st Defendant in respect of the Plaintiff's claim. He submitted that the same argument applied to the 4^th Defendant.

Issue estoppel

16. The argument is attractive but the fundamental question is : on what basis can the Plaintiff be estopped, in her claim against the 3^rd Defendant, from alleging that the driver was in fact not the 2^nd Defendant but rather the 1^st Defendant. Mr Chong could cite no authority. It would appear that the only possible basis is that of res judicata. It is necessary to remind oneself how the doctrine of issue estopped by res judicata would arise. Lord Guest in Carl Zeiss Stiftung v. Rayner & Keller Ltd. (No.2) [1967] 1 AC 853 at page 935A stated that, 'The requirements of issue estoppel still remain (1) that the same question has been decided; (2) that the judicial decision which is said to create the estoppel was final; and (3) that 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.

17. The nature of a judgment in default is discussed at Note 13/1/6 of the Supreme Court Practice 1997: "By making default in giving notice of intention to defend, the defendant admits all the allegations in the statement of claim endorsed on the writ (Cribb v. Freyberger [1919] WN 22). A judgment in default is not a judgment 'on the merits' (Oppenheim v. Mohomed [1922] 1 AC 482); and a judgment in default of giving notice of intention to defend creates a very limited estoppel, precluding the defendant from setting up in a subsequent action defence which was necessarily and with complete precision, decided by the previous judgment (New Brunswick Ry Co v. British and French Trust Corporation [1939] AC 1; Kok Hoong v. Leung etc Mines Limited [1964] AC 993)."

No estoppel between 1^st and 3^rd Defendants

18. Between the Plaintiff and the 1^st and 2^nd Defendants, the principle of res judicata may well apply. However, I have some doubt whether the principle will apply between the Plaintiff and the 3^rd Defendant. Before the principle of res judicata would apply, it has to be established that the 3^rd Defendant was a party or privy to the adjudication in which judgment was obtained against the 2^nd Defendant by the Plaintiff. There was certainly no adjudication on the merits of the Plaintiff's claim against the 2^nd Defendant because the judgment was obtained as a result of procedural default. There was no adjudication between the Plaintiff and the 3^rd Defendant that the 2^nd Defendant was the driver. There was also no privity of interest between the 3^rd and 1^st Defendants. Hence the question of estoppel would not arise. The position is most succintly illustrated by the case of Shaw v. Sloan and others [1982] NI 393 in which a collision between a motor cycle and a car led to two sets of proceedings. In the first action the car owner sued the rider of the cycle ("the cyclist") who was found solely to blame. In the second, the cyclist pillion passenger sued the cyclist, the car driver and the car owner. Issuing a third party notice against the cyclist, the latter two contented that as a result of the earlier proceedings he was estopped from denying his sole responsibility. The Court of Appeal ruled that the earlier action did not give rise to issue estoppel between the cyclist and the car driver, Gibson L.J. at page 409 held that:

"          It would, therefore, appear that in no reported case is there any support for the view that the driver and the owner of a car are in law to be treated as being in privity. This confirms my own view of the matter. If either the owner or driver of a vehicle is plaintiff, or claims against the owner or driver of the other vehicle in third party proceedings, his claim is entirely personal and in no way concerns the driver or owner as the case may be of the plaintiff's vehicle. If a driver is alone defendant, then again the proceedings do not affect the owner. If the owner or master is sued, his liability, while dependent on proof of negligence of his driver, does not depend upon the establishment of the liability of the driver. The liability of the owner is in such an event direct, personal and independent. In such circumstances the conception or privity of interest has no place."

19. The Plaintiff is not a party to the appeal and has not appeared at the appeal, but in the light of what I have said so far, it is in any event arguable that between the Plaintiff and the 3^rd Defendant, the Plaintiff is not precluded from alleging that the driver was either the 1^st or 2^nd Defendant although the 1^st Defendant is no longer a defendant in the action. The application to strike out is based on frivolous and vexatious grounds. At this stage of the proceedings, I cannot say that the 3^rd Defendant's claim against the 1^st Defendant is so obviously frivolous and vexatious that I ought to strike out his Notice of Contribution.

Independent claim of 4^th Defendant

20. Although what I have said on estoppel also applies to the claim between the Plaintiff and the 4^th Defendant, in relation to the 4^th Defendant, his position is even stronger. The Plaintiff's claim against the 4^th Defendant would not be dependent on her establishing a claim against the 3^rd Defendant. What Mr Chong said regarding restrictions on the Plaintiff in her claim against the 3^rd Defendant would not apply to the 4^th Defendant. The 4^th Defendant's Third Party Notice against the other defendants consisted of the 4^th Defendant's claim for indemnity against the Plaintiff's claim and also in respect of his personal claim. Whether the 4^th Defendant could pursue against the 1^st Defendant would not depend on the difference in the nature of his claim. Instead of issuing a fresh writ against other tortfeasors, the 4^th Defendant is entitled to rely on the Third Party Notice against other parties (including the 1^st Defendant) who is responsible for the collision.

Order of the Registrar

21. Mr Chong also relied on the order of the Registrar in which the third parties were allowed to take part in the main action and were ordered to be bound by the result of the trial. I cannot see how this order would assist him in his argument. The default judgment is not obtained as a result of the trial.

Conclusion

22. In the circumstances, the appeal against the decision of the Master must be dismissed with costs nisi in any event to the 3^rd and the 4^th Defendants. The 1^st Defendant is legally aided, his own costs is to be taxed in accordance with Legal Aid Regulations.