勞慧聲經營之恆利公司 v. 安聯保險香港有限公司

HCA 4084/2001

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

ACTION NO. 4084 OF 2001

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REASONS  FOR  RULING

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1.  On 1 February 2005, I ruled that Liu Tsz Wah [“Liu”] is not a party to this action and she should not be permitted to address the court in this case except by way of giving evidence as a witness.  I now give reasons for this ruling.

2.  Although the hearing was conducted in Chinese, I decide to give my reasons for ruling in English because I think the case raises a point of general importance which should be brought to the attention to both monolingual and bilingual judicial officers, legal practitioners as well as the general public.  I therefore also direct that the Reasons be handed down in open court.  I further direct that upon the handing down of the Reasons, my clerk shall inform Lo and Liu by phone to arrange for an appointment to have the Reasons translated to them by the Court Interpreter in Chinese if they so wishes.

3.  The Plaintiff in this action is Hang Lee Company.  At the time when the Writ was issued on 13 September 2001, the Plaintiff was “勞慧聲經營之 Hang Lee Company”. 勞慧聲 [“Lo”] was the sole proprietor of this firm called Hang Lee Company up to 14 December 2001.  Liu joined in as a partner on 14 December 2001.

4.  The action concerns the Plaintiff’s claim in respect of an incident happened on 21 December 2000 at the shop premises of Hang Lee Company.  Due to the sabotage of some unknown persons, the premises were flooded and damages were caused to the goods of the Plaintiff.  The Plaintiff made a claim for such damages under two insurance policies that had been taken out with the Defendant.  The Defendant found the claim questionable and disputed liability.

5.  Ever since the start of the action, Lo had not appeared at any interlocutory hearings.  Liu purported to represent the Plaintiff although she was not a lawyer.  By an affirmation of 31 January 2002, Liu said she was admitted as a partner of Hang Lee Company since 14 December 2001  and she claimed to represent the firm in this action.  For reasons set out below, this does not give her any right to represent the Plaintiff in this action.

6.  Pursuant to an order of Master Levy dated 11 March 2003, the title in the Writ was amended to “Hang Lee Company”.  However, the Statement of Claim still pleaded that Lo was the proprietor of Hang Lee Company and the claim was based on her claims under the insurance policies.  The two policies were taken out by Hang Lee Company on 8 January 2000 and 27 April 2000 respectively.  Hence, Liu could not have been a party to the insurance contract.  On her own case, she was not a partner of Hang Lee Company on those dates.  The Defendant had not made any contract with her. 

7.  The case first came to me on 5 January 2004 by way of pre-trial review.  It was originally set down for a three days trial.  Having read the papers, it was quite apparent to me that three days were insufficient.  It was then revealed to me that there had been two District Court cases (DCCJ 18282 of 2001 and DCCJ 14166 of 2001) concerning the same incident.

8.  Both District Court actions had been tried, one took 7 days and the other one took 27 days.  The plaintiffs in those cases were firms carried on business at the same shopping mall.  They claimed against the insurers in the District Court actions.  Liu also represented those plaintiffs in those cases and she gave evidence on behalf of those plaintiffs.  She also joined in as a partner to those plaintiffs after the incident.  The Defendant in the present action was also the defendant in one of the District Court Case, viz. DCCJ 18282 of 2001.  The claims of the plaintiffs were dismissed in both cases, in DCCJ 18282 of 2001 by Deputy Judge M Wong on 20 December 2003 and in DCCJ 14166 of 2001 by Judge L Chan on 15 September 2003.  Liu said the plaintiffs in those actions are appealing. However, the appeals are yet to be heard.

9.  On 5 January 2004, parties had different estimates as to the length of trial of this case and I was concerned about the impact of the two District Court cases on the present action.  It was however quite plain (and parties agreed) that 3 days would not be sufficient.  The trial dates were therefore vacated and I directed another call-over hearing on 27 February 2004 in order to have more information to enable this court to form a realistic estimate as to the length of trial.

10.  At the hearing on 27 February 2004, Liu asked for 90 days for the trial and she would adduce what transpired in the District Court trials as evidence in this trial.  Solicitor for the Defendant drew my attention to the fact that Liu was a partner to the plaintiff in DCCJ 18282 of 2001, Parklane Floral & Balloons Design and the Defendant was considering the implication of the judgment in that case to the present action.

11.  I was thus alerted to the potential difference between the position of Liu and that of Lo in this action.  Having taken part in DCCJ 18282 of 2001 as a party, Liu might be bound by the findings or determinations therein.  Lo’s position could be different.  I therefore directed that there be another call-over hearing and that Lo should appear in person at that hearing.

12.  The next hearing took place on 18 March 2004.  Lo did not appear.  Liu claimed that she could not take time off to do so.  By that time, the Defendant had taken out a summons on 15 March 2004 (wrongly dated as 15 April 2004) to strike out the Plaintiff’s claim based on the two District Court judgments.  It seemed to me that there was a need to identify clearly who was the Plaintiff.  Liu informed the court that Lo had transferred half of the interest in the firm to her on 14 December 2001.  Hence, the two became partners.  Liu also said the firm had been closed down in 2002 and the correspondent address was the address of Parklane Floral & Balloons Design at Jaffe Road.

13.  Directions were given for the conduct of the striking out summons and this court directed again that Lo should attend the next hearing in person or through her lawyer.  She was also warned that the failure of her attendance might result in her claim being struck out for want of prosecution.

14.  The Defendant took out a summons under Order 81 Rule 2 on 26 April 2004 and it was heard by me on 2 June 2004.  Lo again failed to appear.  Liu queried why reference was made to the composition of the firm at the time the cause of action accrued.  The short answer was that it was so provided for under Order 81 Rule 2.  But there is a sound rationale for that rule.

15.  It is a fundamental principle of law that a firm, unlike a limited company, is not a legal entity.  In the eyes of law, the real parties to the action when they sue in the name of a firm are the partners of the firm.  Under Order 81 Rule 1, they are permitted to adopt the convenient course of naming the firm as a plaintiff.  However, that does not alter the true legal position, viz. the plaintiffs are the partners to the firm at the time when the cause of action accrued.

16.  It is necessary to specify the time for determining who were partners and who were not because the composition of a firm may change over time.  Even the same firm name is used after a change in its composition, e.g. by admitting new partners, as a matter of fact they are a different group of people and regarded as such as a matter of law.  Hence the firm prior to the change is not the same as the firm after the change.  Upon every admission of new partner, the law views it as an implied dissolution of the old partnership and the formation of a new partnership. 

17.  It follows from this principle of law that to determine who is actually party to an action when the firm is named as a plaintiff, one has to enquire who were the proprietor or partners of the firm at the time when the cause of action accrued.  If a person becomes a partner of a firm after the accrual of the cause of action, he simply has no right to claim.  He is therefore not a proper party to the action even though the firm name is used for convenience sake.

18.  In other words, by adopting the procedure under Order 81 Rule 1 in naming a firm as a plaintiff, a litigant impliedly put forward the proprietor or partners of the firm at the time when the cause of accrued as the plaintiff or plaintiffs.  The firm name is just a shorthand description for the names of all the proprietor or partners at that particular point in time.

19.  Coming back to the present case, I acceded to the application of the Defendant and made an order under Order 81 Rule 2(1) on 2 June 2004.  Up to today, the order has not been complied with.  There has not been any explanation by Lo why she chose to ignore my order.  Liu also did not proffer any explanation.

20.  In view of developments up to 1 February 2005, I have serious doubts whether the present action is prosecuted by a proper person.  From the above analysis, the proper plaintiff should be the proprietor of Hang Lee Company at the time of the incident, viz. 21 December 2000.  Notwithstanding the non-compliance with my order under Order 81 Rule 2(1), the information before me clearly indicated that Liu was not a partner or proprietor of Hang Lee Company at that time.  This is evidenced by her own affirmation and confirmed by her own submission to this court mentioned above.  I cannot understand why Lo repeatedly failed to turn up at hearings despite specific direction by this court that she must appear personally or through solicitor.

21.  Liu had conducted similar claims arising out of the same incident in the District Court and lost twice before two different judges after lengthy trials (occasioning large financial liability in terms of costs on the part of the plaintiffs in those cases) should this court grant leave to Lo to have Liu represented her in this action?  In fact, Lo had not made such application before me.

22.  It must be remembered that apart from lawyers and litigant in person, a third party has no right of audience before the court.  Exceptionally, the court may consider granting leave to a legally unqualified person to speak for a litigant acting in person.  However, whether such request is entertained is a matter for the discretion of the judge before whom the case is heard.  Having the opportunity of hearing Liu at the various hearings, bearing in mind her attitude towards the court and the points she took on those occasions, I am of the firm view that her representation of Lo would not be conducive to the proper administration of justice.

23.  In any event, as far as the representation of Lo is concerned, it is a matter between this court and Lo.  Liu had no right whatsoever to claim to represent Lo.  It must also be borne in mind that such a request must be made by the litigant in person as opposed to the nominated representative.  As I said, Lo had not made any application.  Further, even if a court is minded to give such a leave, the litigant in person must still be present throughout the proceedings unless excused by the court.  In my judgment, it is high time that the court should be vigilant in ensuring that only proper persons are given right of audience in order not to waste the time of the court and the opposing parties.

24.  At the hearing on 1 February 2005, I considered that it was necessary for me to reiterate strongly that I would not permit Liu to address the court on behalf of Lo though I had made similar intimations at the earlier hearings when I directed Lo to attend in person or through her solicitor.  I gave Lo another chance to comply with my order of 2 June 2004 and to come to court to tell me her stance with regard to this action.  Directions were given accordingly. In the meantime, the action is stayed.

25.  Liu maintained she had a right to address this court on her own account.  She contended that since she is a partner of Hang Lee Company, she is also a plaintiff.  For reasons given above, this submission is misconceived.  It fails to take into account of the date of accrual of the cause of action as the relevant time for determining whether a person can be regarded as being joined as a plaintiff by the use of the firm’s name.  Liu cannot deny that she was not a partner of Hang Lee Company on 21 December 2000.  Hence, she is not a plaintiff in this action although she has become a partner subsequently.

26.  The amendment of the Writ on 11 March 2003 could not assist Liu.  By reason of Order 81 Rule 1, the relevant “Hang Lee Company” is the Hang Lee Company as it was on 21 December 2000.  There was nothing in that amendment to indicate that Liu was added as a plaintiff to this action.

27.  Further, as a matter of law, since Liu was not a partner on 21 December 2000, she simply had no cause of action against the Defendant.

28.  Liu vaguely suggested that there was another company called Hang Lee Company and that somehow might advance her case.  I invited her to file evidence regarding the same but she declined.  In view of that, I cannot attach any weight to that suggestion.

29.  I therefore concluded that Liu was not a partner to the relevant “Hang Lee Company” which is the Plaintiff in this action.  She therefore did not have any right to address this court.

30.  In the course of the hearing on 1 February 2005, Liu objected to my query of her right to address the court on my own motion and accused me of bias.  I see no merit in such objection. It is the duty of every judge to see to it that every litigant before him or her has a fair opportunity to address the court.  However, it is also the duty of every judge to see to it that the person who addresses the court is the right and proper person to make submissions on behalf of a party.  It is not the function of the court to hear submissions from non-parties or officious bystanders, be they well intentioned or otherwise.  Given the circumstances in this case and the indisputable fact that Liu was not a partner of Hang Lee Company at the time when the cause of action accrued, the court is duty bound to enquire what right does Liu have to ask the court to hear her.  It is unfortunate that Liu interpreted such enquiry as an indication of bias on my part.  I have repeatedly invited Liu to make submissions to support her contention that she had the locus standi to advance a claim as plaintiff in this action before I ruled on the point. For that purpose, I had stood down the matter for 15 minutes to give her time to calm down and organize her submissions.  She simply repeated the argument that I have dealt with in Paragraph 23 above.

31.  Liu also queried why the trial was delayed.  The short answer is that the person who claimed to represent the plaintiff is, on analysis, not a proper representative of the Plaintiff and the real plaintiff, namely Lo, had repeatedly refused to turn up.

32.  In such circumstances, I did not think a fair-minded and informed observer would perceive a reasonable apprehension of bias on my part in deciding that Liu is not a plaintiff in this action and should not be permitted from addressing this court.  I therefore did not accept that I should recuse myself from dealing with the matter.   

33.  Liu complained that she had all along be permitted to address the court and it was now too late to correct any mistake as to her locus standi.  The point has to be considered on two different levels.  As regards her right to address the court as representative of Lo, it is obvious from the authorities that each judge has his own discretion in regulating the conduct of proceedings in his court.  For my part, for reasons given, I refuse to allow Liu to address this court.  The fact that she had been allowed to do so in the past is neither here nor there.  As regards her right to address the court on her own behalf, it was the application of the relevant legal principles which led me to conclude that she has no such right.  I am not aware of any previous determination that she has such a right.  It seems to me the point has never been properly addressed.  I see no reason why I should not correct this misconception at this stage.   

34.  It should be obvious from what I have said that I am not preventing the Plaintiff from acting in person.  Lo can still act in person to conduct her own claim.  What she cannot do is to insist on having Liu to conduct her case.  As regards Liu, she is not a litigant in this action and there is therefore no question of her not being allowed to act in person.      

35.  Having made my ruling, I also ordered Liu to pay the Defendant’s costs of the part of the hearing on 1 February 2005 and fixed the same pursuant to Order 62 Rule 9(4)(b) at $10,000 after hearing submissions.  Although Liu was not a party to this action, she was a party to that part of the proceedings in dealing with her own right to address the court.  The situation is analogous to an unsuccessful intervention by an intervenor.  I therefore considered that this court has jurisdiction to order cost against Liu under Section 52A of the High Court Ordinance.  I considered the figure proposed by defence counsel to be reasonable (1/4 of the whole of the costs for 1 February 2005) and it was appropriate to order a gross sum costs payable forthwith in the circumstances.