WONG YU CHO ROLLY t/a MARCO POLO AND CHINA OVERSEA TECHNICAL DEVELOPMENT v. HO CHI SUM AND ANOTHER

HCA 2132/2005

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

ACTION NO. 2132 OF 2005

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D E C I S I O N

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Introduction

1.  This is the plaintiff’s appeal against the Registrar’s order dated 30 June 2006 whereby the Registrar struck out the plaintiff’s claim and dismissed this action.

2.  By the time of this appeal, the plaintiff has commenced quite a few legal actions (both in the High Court and the District Court) the underlying facts of which are related.  In order to understand the issues raised in this appeal, some of these legal actions have to be mentioned briefly.

DCCJ 4492/2004

3.  The plaintiff commenced DCCJ 4492/2004 in the District Court in August 2004 (“the tort claim”).  He alleged that he suffered loss due to the negligence of the defendant therein (the second defendant in this action) (“IRD”).  He also alleged that IRD’s staff trespassed his property earlier.

4.  IRD denied the tort claim, and counterclaimed the plaintiff for the payment of tax earlier assessed.

5.  The plaintiff failed to file a defence to the counterclaim and default judgment was entered against him on 30 December 2004 as a result.

6.  On 17 January 2005, the plaintiff applied to have the default judgment set aside.  Among the matters put forward in support of the application, he claimed that an agreement was reached between him and IRD’s legal representative on 27 October 2004 whereby the time for filing a defence was in effect extended until further notice from him.  In an affirmation dated 17 January 2005, the plaintiff described what happened on that day:-

“	… in the District Court courtroom … I put a note to the said Master … Master Ko suggested that [IRD’s] Counsel … and I should have a discussion outside …  [Government counsel] … did agree to temporary set aside this case until I give him further notice … ” (para. 5 thereof).

7.  The application to set aside the default judgment was refused by the District Court.  In a decision handed down on 20 June 2005, the judge dealt with the alleged agreement as follows:-

“

The Plaintiff alleged that the Defendant had agreed not to proceed with the case, until further notice given by him.  If there had been such an agreement between the parties, the Plaintiff should have informed Master Ko the existence of such an agreement, and should not have told the Court that ‘Judging from what we see now, we can assume that 28 days is fine’” (para. 5 thereof).

8.  The plaintiff’s subsequent application for leave to appeal out of time was dismissed by the District Court on 9 September 2005.

HCMP 2032/2005

9.  He made a similar application to the Court of Appeal on 23 September 2005 but that was also dismissed on 7 March 2006 (“the leave application”).  The plaintiff’s affirmation of 9 November 2005 also referred to the hearing on 27 October 2004:-

“	During the hearing, I have shown my police record witness statement … for Master’s perusal … Master was then instructed me and … Senior government Counsel … to hold discussion outside the courtroom.  In the conference room outside the court room and in the presence of Miss Cheung, my personal assistant, [government counsel] has agreed to temporary set aside the case … ” (para. 34 thereof);
	On [27 October 2004], Master has granted me 28 days … to file and serve a Reply and Defence to Counterclaim.  It was also noted that during the hearing … I have told the Court that I would send in notification in writing if granting of 28 days was not good enough for me, in case something unexpected happen … ” (para. 35 thereof).

10.  In its judgment dated 7 March 2006, the Court of Appeal rejected the plaintiff’s affirmation evidence:-

“	The Plaintiff alleged in an affirmation filed on 17 January 2005 that at the court hearing on 27 October 2004 he had informed the master of the kidnap threat and he had also shown to [government counsel] outside the courtroom police statements regarding the kidnap threat.  The Plaintiff alleges he asked and [government counsel] orally agreed “to temporary set aside of DCCJ 4492 of 2004 until I give him further notice to proceed further with the matter ...”.  The Plaintiff alleges that he had posted a letter the following day (28 October 2004) to [government counsel] confirming the agreement to “temporarily put aside this case until my further notice to you”.  Accordingly the Plaintiff says the Defendant was not entitled to enter default judgment as that was in breach of the agreement” (para. 16);
“	[Government counsel] filed an affirmation in opposition on 15 February 2005 exhibiting a transcript of the hearing before Master Ko which showed clearly that the Plaintiff had only asked for 28 days to file the Reply and Defence to Counterclaim, and that [government counsel] had in fact warned the Plaintiff that if the Defendant did not receive the pleading after 28 days, it would enter judgment.  [Government counsel] denied having received the letter dated 28 October 2004” (para. 18);
“	The Plaintiff’s attempt to get over this order was disingenuous.  In his affirmation in support of the summons to set aside, the impression given was that [government counsel] had orally agreed to an indefinite extension after reading the police statements and that his (the Plaintiff’s) purported letter dated 28 October 2004 was confirmation of this agreement.  There was no reference at all to the master’s order for an extension of 28 days only.
	However the transcript proved that what had happened was that at the master’s suggestion, the parties had conferred outside the court room during which [government counsel] was shown the police statements.  The parties then returned to the court.  The Plaintiff then asked for 28 days and [government counsel] made no objection but gave an express warning to the Plaintiff that judgment would be entered if the Defence to Counterclaim was not filed within that period.  The master then made the order giving an extension for 28 days only.
	After being faced with the transcript of hearing, the Plaintiff tried to say that the agreement with [government counsel] was made after the court hearing.  That is inconceivable.  There was no reason why [government counsel], after having agreed to an extension of 28 days only and given the warning in court that he did, would then without any change in circumstances suddenly agree immediately afterwards outside court to an indefinite extension” (para. 26 to 28).

11.  Consequently, the default judgment entered on the counterclaim, which represents the amount of tax claimed by IRD, remains valid.

The Present Action

12.  This action was commenced on 28 October 2005.  Government counsel who appeared for IRD at the hearing on 27 October 2004 was named as the first defendant (“D1”) whereas IRD was named as the second defendant.

13.  The statement of claim referred to the said hearing and in essence repeated the allegation of an agreement having been reached with D1:-

“	… to temporary set aside for the case of DCCJ 4492 of 2004 until [the plaintiff] give [D1] further notice … ” (para. 8).

It then alleged a breach of that agreement by the defendants in entering default judgment.  The statement of claim continued to allege that the breach was perpetuated to:-

“	… cover up [IRD] and [D1] … [to deprive the plaintiff the] chance to reply the defence and counterclaim” (para. 18)

and the default judgment:-

“	… is not fair and disadvantages judgment and decision … ” (para. 20).

The plaintiff also claimed that:-

“	… the Defendants should compensate for the loss of … convenience, honour and right, and damage to … goodwill and reputation” (para. 21)

and other related relief.

14.  As stated above, this action was dismissed by the Registrar on 30 June 2006.

This Appeal

15.  The gist of the defendants’ case for seeking this action to be dismissed is the doctrine of res judicata.  They contend, in brief, that the issues the plaintiff sought to raise in this action have been determined by the courts in the tort claim and the leave application.

16.  The plaintiff contends, on the other hand, that those proceedings are independent of this action.  His case is that:-

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[the court in the tort claim] had never considered the mutual agreement between [government counsel] and the Plaintiff made outside the courtroom after the completion of the hearing on 27 October 2004 about temporary set aside [the tort claim], which is the key issue to this whole action” (para. 22, plaintiff’s skeleton arguments).

Another reason put forth is that there is new strong evidence:-

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[in the form of affirmation evidence of Ms. Cheung, the plaintiff’s personal assistant] … to prove that there did have an agreement made between [government counsel] and the Plaintiff, and thus [government counsel] has breached the agreement, which has also never been considered [in the tort claim] and Court of Appeal” (para. 23, plaintiff’s skeleton arguments).

(a) Relevant Legal Principles

17.  A précis of the relevant legal principles is a good starting point.

18.  The doctrine of res judicata has been described in Canada and Dominion Sugar Co. Ltd. v. Canadian National (West Indies) Steamships Ltd. [1947] AC 46, 56 as a substantial rule of law.  The learned authors of Spencer Bower, Turner and Handley: The Doctrine of Res Judicata (1996) 3^rd Ed., provided the following definition:-

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Where a final judicial decision has been pronounced on the merits by [a judicial tribunal] with jurisdiction over the parties and the subject matter, any party to such litigation, as against any other … is estopped in any subsequent litigation from disputing such decision on the merits … provided the party entitled raises the point at the proper time” (para. 9).

19.  Apart from the above, the learned authors also discussed “issue estoppel” which is:-

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… an extension of the same rule of public policy.  There are many causes of action which can only be established by proving that two or more different conditions are fulfilled … and there may be cases where the fulfilment of an identical condition is a requirement common to two or more different causes of action.  If in litigation upon one such cause of action any of such separate issues as to whether a particular condition has been fulfilled is determined by a court … neither party can, in subsequent litigation between one another upon any cause of action which depends upon the fulfilment of the identical condition, assert [that condition]” (emphasis supplied) (para. 182).

20.  Thirdly, the learned authors said:-

“	Whenever the party against whom a decision is pronounced failed to raise some question he could have raised without detriment to his interests which it was his duty to raise, the adverse decision includes an adverse decision on the omitted question” (emphasis supplied) (para. 189).

21.  It should be noted that parties to proceedings in personam:-

“	… include not only one originally named as such, but also one who intervenes and takes part in the proceedings, or who insists on being added as a party and obtains an order to this effect” (para. 218).

Thus, the doctrine can be set up by:-

“	… parties in both proceedings [which] are the same, or privies of those in the first … Any question of physical identity is one of fact” (para. 214).

22.  Similar remarks concerning “issue estoppel” and “cause of action estoppel” appear in Barnett: Res Judicata, Estoppel, and Foreign Judgments (2001), para. 5.01 to 5.09.

23.  Likewise, in Yat Tung Investment Co. Ltd. v. Dao Heng Bank Ltd. [1975] 581, the Privy Council (on appeal from Hong Kong) said:-

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Their Lordships agree with the view of [the Hong Kong court] that the true doctrine in its narrower sense cannot be discerned in the present series of actions … But there is a wider sense in which the doctrine may be appealed to, so that it becomes an abuse of process to raise in subsequent proceedings matters which could and therefore should have been litigated in earlier proceedings … ” (p. 590A-B);

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[citing Greenhalgh v. Mallard [1947 2 All ER 255, 257] … res judicata for this purpose is not confined to the issues which the court is actually asked to decide, but … it covers issues or facts which are so clearly part of the subject matter of the litigation and so clearly could have been raised that it would be an abuse of the process of the court to allow a new proceeding to be started in respect of them” (p. 590G-H).

24.  Similar observations can also be found in:-

(a)	Hunter v. Chief Constable of the West Midlands Police [1982] AC 529, 541B-C, 542C-D;
(b)	Corby v. Government of the USA [2000] 3 HKC 688, 695I-696G;
(c)	Berthier Godown Ltd. v. C Wah Realty Ltd. and Another [1986] HKC 8.

(b) Applying the Law to the Facts

25.  I agree with the defendants that the Registrar’s order was correctly made.  I also find the plaintiff’s arguments to be untenable.

26.  First, the main issue raised in this action, namely, the alleged agreement reached between the parties on 27 October 2004, has clearly been determined by the courts earlier (see para. 7 to 8 and 9 to 10 above).  It is obvious that when the courts concluded the default judgment in the tort claim was a regular judgment, they must have been made a finding adverse to the plaintiff’s claim that an agreement has been reached between him and IRD (through D1) on 27 October 2004.

27.  Despite the plaintiff’s contention to the contrary, the fact that this action shares a common factual basis with the tort claim (and the leave application) is shown by the need for those facts to be set out in the statement of claim herein (especially para. 3 onwards).

28.  As regards the defendants’ “locus standi” to invoke the doctrine of res judicata:-

(1)	IRD has been named a defendant in the tort claim, the leave application and this action;
(2)	D1, though not a named as a defendant in the tort claim or the leave application, was the same individual who allegedly has entered into an agreement with the plaintiff on 27 October 2004 (according to the court documents filed by the plaintiff in the tort claim, the leave application and this action).

In such factual context, both defendants can properly be regarded as “parties to the proceedings” for the purpose of the doctrine.

(c) Conclusion

29.  This appeal should therefore be, and is, dismissed.

Other Matters

30.  For completeness, I do not find the evidence adduced by the plaintiff in this action (whether his own or the so-called new evidence) to be sufficient to ground this action as one seeking to set aside earlier court orders on the ground they were obtained by fraud: Jonesco v. Beard[1930] AC 298.  For this purpose, I will refer to the court’s observation in Birch v. Birch [1902] P 130, 136:-

“	… the court ought to treat as frivolous and vexatious any cause of action in support of which the plaintiff does not produce evidence of facts discovered since the former judgment which raise a reasonable probability of the action succeeding”.

The plaintiff knew (as he so claimed in his own affirmations) that his personal assistant was present at the time of the alleged agreement of 27 October 2004.  No reason has been proffered why her affirmation was not filed earlier in the tort claim or the leave application.

31.  The Court of Final Appeal made the following observation in Ng Yat Chi v. Max Share Ltd. and Another (2005) 8 HKCFAR 1:-

“	47.	It is unfortunately the experience of the courts in many jurisdictions that problems caused by litigants who repeatedly abuse the court’s process are on the increase.  I shall refer to such litigants as “vexatious litigants”, including within such class, not merely those who have formally acquired the statutory status of vexatious litigant by order of the court … but more generally, those who persistently engage in the abuse of the court’s process.
	48.	There are many variants of such abuse and of what motivates it.  It … may be a malicious campaign of harassment directed against a particular adversary.  Actions which are unintelligible or wholly frivolous may be commenced by litigants who are unfortunately mentally unbalanced.  Sometimes the vexatious conduct springs from some deeply-felt sense of grievance left unassuaged after unsuccessful litigation.  The vexatious litigant typically acts in person and characteristically refuses to accept the unfavourable result of the litigation, obstinately trying to re-open the matter without any viable legal basis.  Such conduct can become obsessive with the litigant not shrinking from making wild allegations against the court, or against the other side’s legal representatives or targeting well-known public personalities thought to be in some way blameworthy.  Numerous actions may be commenced and numerous applications issued within each action” (emphasis supplied).

32.  As stated above, the plaintiff has by now commenced quite a few legal actions; his skeleton arguments refer to 6 actions in the District Court.

33.  According to the plaintiff:-

(a)	one action (DCCJ 5016/2005) concerns an alleged trespass by IRD and its staff onto his property.  But this complaint appears to be one of those already made in the tort claim;
(b)	another action (DCCJ 5483/2006) concerns an allegation against the Commissioner of Inland Revenue personally for ordering, or permitting, the said trespass;
(c)	three actions (DCCJ 4092/2006, DCCJ 145/2007 and DCCJ 146/2007) concern allegations that government counsel who appeared as legal representatives at different court hearings misleading the court;
(d)	one action (DCCJ 4093/2006) concerns an allegation that an assessor of IRD having made false statements in an affirmation filed in the tort claim.

34.  In view of the events leading to this action, and the multiplicity of actions commenced (and still pending) in the District Court, regrettably there is at least a prima facie appearance that some of the characteristics found in many vexatious litigants can be found here.

35.  Without in any way indicating the prospect of success of any such application (if and when it is in fact made), consideration should be given to whether applications pursuant to s. 27, High Court Ordinance (Cap. 4) and/or for a restricted proceedings order or restricted applications order are justified (see, for example, Secretary for Justice v. Ma Kwai Chun [2006] 1 HKLRD 539).

Costs Order

36.  Despite the plaintiff’s argument to the contrary, I do not find any valid reason to depart from the usual rule that costs should follow the event.  There will accordingly be a costs order that the costs of this appeal be paid by the plaintiff to the defendants to be taxed if not agreed.