RAY CHEN v. ANITA WAN CHING LAM AND ANOTHER

HCA4582/2001

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

ACTION NO.4582 OF 2001

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J U D G M E N T

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Background

1. This is an appeal from the order of Master H.C. Wong dated 18 January 2002 whereby the learned master struck out the plaintiff's Statement of Claim and dismissed the action against the defendants with costs. The plaintiff appears in person in this appeal, the defendants are represented by Mr Kevin Bowers.

2. In order to understand the issues which arise in this appeal, it is necessary to set out the background to the present action.

3. The plaintiff was from August to December 1998 employed by IBM (HK) Limited ("IBM") as a senior information technology specialist. On 29 January 1999, he instituted proceedings in the District Court making claims of sexual harassment and sexual discrimination against IBM and one Tamara Rus ("Ms Rus"), a manager in IBM's employment. Ms Rus, who was a transition manager working on the same project as the plaintiff, was the person whom the plaintiff alleged had made unwelcome sexual advances to him.

4. The proceedings in the District Court were at first instituted in the wrong list. The action number was DCCJ 1756/1999. On 1 February 1999, this technical error was rectified when the action was discontinued and a new action instituted, this time in the correct list. This was DCEO 2/1999 ("the 1st Action").

5. The plaintiff engaged the 2nd defendant as his legal representatives in this action (having retained them on or about 20 January 1999). The solicitor handling his case was the 1st defendant.

6. On 1 February 1999, upon the 2nd defendant's advice, the plaintiff obtained ex parte from HH Judge B. Fung a Prohibition Order against Ms Rus. This order was later set aside on 12 February 1999 by Judge Fung on the basis that there existed a viable defence to the plaintiff's claim. The learned judge, however, reserved the question of material non-disclosure and costs to the judge trying the action.

7. The 1st Action came on for trial on 2 March 2000 before HH Judge M. Poon, lasting some 12 days. In a judgment delivered on 5 February 2000, Judge Poon dismissed the plaintiff's claims and further found, on the Prohibition Order, that there had been material non-disclosure. The learned judge also found that the material non-disclosure was deliberate and malicious, and indeed that the whole action had been brought maliciously and frivolously. The costs awarded as far as the Prohibition Order was concerned, were made on an indemnity basis.

8. The plaintiff appealed. On 1 November 2001, the Court of Appeal dismissed the plaintiff's appeal, remarking in its Reasons for Judgment (handed down on 8 November 2001) that the appeal was "hopeless and should never have been brought".

9. I should pause here to observe that the plaintiff also instituted proceedings against IBM for victimization under section 9 of the Sex Discrimination Ordinance, Cap.480 (in DCEO 3/2000). This was tried before his Honour Judge Saunders who dismissed the claim on 3 January 2001.

10. On 20 January 2000, the plaintiff commenced proceedings against the 1st and 2nd defendants in the District Court (in DCCJ 531/2000) ("the 2nd Action") alleging negligence and breach of retainer in the way they had handled and advised him in the 1st Action. One of the complaints levelled against the defendants was in relation to the mistake in issuing proceedings in the general list at the District Court rather than in the specialist one relating to claims under the Sex Discrimination Ordinance. However, the following allegations were also pleaded in the Particulars of Claim :

"25. By reason of the 1st Defendant's employment and position as servant and/or agent of the 2nd Defendant, the 2nd Defendant is vicariously liable for the 1st Defendant's negligence of professional duty particularised below.

Particulars of Negligence

26. The 1st Defendant was negligent in that she:

(a) Failed to heed the initial instructions of the Plaintiff

(b) Neglected Plaintiff's instruction when asked to re-examine the Writ

(c) Refused to materialize earlier commitment to properly rectify the error upon detection

(d) Failed to discharging her duties as a legal advisor in general"

11. In their Defence and Counterclaim, the defendants counterclaimed for outstanding fees due to them from the plaintiff arising from their retainer as the plaintiff's legal representatives in the 1st Action. Reference was made to details of the work done, services rendered and disbursements expended in the course of the retainer (which was from 20 January 1999 to 23 February 1999). The pleading makes express reference to the Prohibition Order, as can be seen from Schedule 1 annexed to the Defence and the Counterclaim.

12. Further, among the matters pleaded by the defendants was the following :

"8. Save as the aforesaid, the Defendants make no admission to each and every allegation contained in paragraphs 4 to 17, 21, 22 and 26, other than that the 1st and 2nd Defendants admit that a mistake was made by them when issuing the Plaintiff's Writ in DCCJ 1756/99 against IBM/Rus in the wrong list of the District Court during the afternoon of Friday, 29 January 1999. The Defendants aver however that the said mistake was rectified by the morning of Monday, 1 February 1999 by the filing and service of a Notice of Discontinuance in DCCJ 1756/99. In all other respects, the 1st and 2nd Defendants acted with all reasonable skill, care and diligence in connection with all and any matters relating to the Plaintiff's dispute with IBM/Rus." (emphasis added)

13. It can thus be seen that the issues in the 2nd Action went beyond just the allegation of mistake in listing the action. The question of the defendants' performance of their retainer was very much before the court and this included the Prohibition Order. This is put beyond all controversy when one refers to the Further and Better Particulars of the Particulars of Claim dated 14 August 2000 provided by the plaintiff. The defendants had made a Request for Further and Better Particulars under paragraphs 16 and 25 of the Particulars of Claim in the following terms :

"D. UNDER PARAGRAPH 16

Of the allegation that:-

'...the Plaintiff rejected such offer in view of the damages the Defendants caused while acting negligently in both DCCJ 1756 of 1999 and DCEO 2 of 1999 have way exceeded the amount the said offer covered.'

AND

UNDER PARAGRAPH 25

Of the allegation that:-

'...the 2nd Defendant is vicariously liable for the 1st Defendant's negligence of professional duty...'

Requests

(a) State the professional duty owed to the Plaintiff by the Defendants.

(b) State when, how and in what way the Defendants acted negligently in DCEO2 of 1999.

(c) Give full particulars of the loss and damage suffered by the Plaintiff as a result of the alleged breach of duty by the Defendants."

14. In the Further and Better Particulars supplied by the plaintiff, he answered as follows :

"D.UNDER PARAGRAPH 16 AND UNDER PARAGRAPH 25

(a) The Defendants should have acted in the best interest of the Plaintiff.

(b) The Plaintiff repeats the bracketed passage in B (c) herein. However to assist the court and clarify confusion, at this instance the Plaintiff would merely state the Defendants had failed, neglected and refused to properly discharge their duties particularly in the matters concerning the application as well as the subsequent preservation of the Prohibition Order in DCEO 2/99, among other major foul ups.

(c) The monies the Plaintiff had to pay in compensation of the defendants' costs in DCCJ 1756/99; the otherwise productive time of the Plaintiff's; the unnecessary pain and suffering endured by the Plaintiff, etc."

15. The 2nd Action was tried by HH Judge Yung in October 2001. Included in the trial bundle before the learned judge was a number of documents in relation to the Prohibition Order. Furthermore, in an affidavit of the plaintiff dated 4 October 2001, allegations were made by the plaintiff alleging a that "a gigantic mess" had been made by the defendants in relation to the Prohibition Order. That affidavit went on to say, "a separate proceeding of negligence is due to commence as soon as it becomes appropriate". Though this affidavit was served in another action (HCMP 3537/2001) in which the defendants' bill to the plaintiff was to be taxed, it was ordered by Master C.B. Chan on 5 October 2001 that this affidavit should stand as the plaintiff's witness statement in the 2nd Action. There is therefore no doubt at the time the 2nd Action was tried that the plaintiff was fully aware of his claims against the defendants in relation to the Prohibition Order.

16. On 16 October 2001, Judge Yung gave judgment in the 2nd Action. Liability was conceded on the defendants' part in relation to the wrong listing aspect and they were ordered to pay to the plaintiff $23,923.03. On the counterclaim, the learned judge, inter alia, adjudged that the plaintiff was liable to pay the 2nd defendant's professional charges (which were the subject matter of ongoing taxation proceedings, i.e., HCMP 3537/2001).

17. Not being content with this decision, the plaintiff appealed to the Court of Appeal in CACV 130/2002. I understand that this appeal has either been dismissed or struck out on the basis that the plaintiff has failed to provide security for costs.

The present action

18. On 22 October 2001, the plaintiff commenced the present proceedings against the defendants. In the Statement of Claim, which was endorsed on the writ, the plaintiff again alleges that the defendants were negligent and/or in breach of their retainer in relation to the 1st Action. The main claim against the defendants is in relation to the Prohibition Order, but in paragraph 18 of the Statement of Claim, it is also pleaded :

"18. Throughout the entire period of retainer (b: Jan 20, 1999 e: Feb 22, 1999), the 1st Defendant also committed number other improprieties or/and negligences:

(a) holding unapproved negotiating meeting with solicitor for opposition party

(b) conspiring with solicitor for opposition party in compelling the Plaintiff to accept an unfavourable settlement

(c) deliberately render false/wrongful legal opinions to compel the Plaintiff to accept an unfavourable settlement

(d) making and presenting fraudulent bill of costs"

19. The claim as regards the Prohibition Order (which the plaintiff in his submissions to me said was really the only complaint in the action) is essentially that the defendants failed to advise him that there was a need to make full and frank disclosure to the court in seeking ex parte relief. When the ex parte order was obtained, the plaintiff had only provided some of the relevant documents to the defendants but not other documents that cast a different light on his claims. Another of the plaintiff's complaints is that when he did eventually hand over to the defendants the documents which ought to have been disclosed earlier, they did nothing. This is confirmed in a letter dated 30 July 1999 from the 2nd defendant to the Law Society following a complaint that had been lodged by the plaintiff. For the purposes of this appeal, I have proceeded on the assumption that, but for the res judicata aspect discussed below, the plaintiff has an arguable cause of action against the defendants.

20. By a summons dated 14 January 2002, the defendants applied to strike out the Statement of Claim under RHC Order 18, rule 19 and/or the court's inherent jurisdiction.

21. The ground put forward by the defendants was based on res judicata, whether in its narrow sense or alternatively in its wider sense. Briefly put, the defendants' submissions were that the issue of the defendants' alleged breach of their retainer or negligence had already been adjudicated upon by Judge Yung or, if not expressly decided, the plaintiff could and should have raised these allegations before the learned judge in the 2nd Action.

Res judicata - the principles

22. I begin with a statement of the general principles :

(1) Res judicata in its narrow sense simply means that a party will not be permitted to relitigate in subsequent proceedings issues which have already been adjudicated upon in previous proceedings by a court of competent jurisdiction. This form of abuse of process is often known as a res judicata proper or res judicata in its classic or narrow sense.

(2) Res judicata in its so-called wider sense is the principle that "the court requires the parties to that litigation to bring forward the whole case, and will not (except under special circumstances) permit the same parties to open the same subject of litigation in respect of matters which might have been brought forward as part of the subject in context, but which was not brought forward, only because they have, from negligence, inadvertence, or even accident, omitted part of their case." : see Henderson v. Henderson [1843] 3 Hare 100, at 115 per Sir James Wigram VC. In Yat Tung Investment Company Limited v. Dao Heng Bank Limited [1975] AC 581, Lord Kilbrandon said at 590A-B, "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".

23. As regards res judicata in its wider sense, there have since Yat Tung was decided been numerous cases in which the width of the principles stated in that case has been questioned. In Bradford and Bingley Building Society v. Seddon Hancock [1999] 1 WLR 1482, the English Court of Appeal questioned the need in the case of res judicata in its wider sense, to show "special circumstances". Rather, it was for the party alleging abuse (in the present case, the defendants) to show that there was in fact an abuse of the process of the court in litigating matters that could have been litigated in earlier proceedings. As Auld LJ put it at 1490F-H :

" In my judgment, it is important to distinguish clearly between res judicata and abuse of process not qualifying as res judicata, a distinction delayed by the blurring of the two in the courts' subsequent application of the above dictum [of Wigram V-C in Henderson v. Henderson]. The former, in its cause of action estoppel form, is an absolute bar to relitigation, and in its issue estoppel form also, save in 'special cases' or 'special circumstances:' see Thoday v. Thoday [1964] P.181, 197-198, per Diplock L.J. and Arnold v. National Westminster Bank Plc. [1991] 2 A.C. 93. The latter, which may arise where there is no cause of action or issue estoppel, is not subject to the same test, the task of the court being to draw the balance between the competing claims of one party to put his case before the court and of the other not to be unjustly hounded given the earlier history of the matter."

24. The emphasis on the court looking at the overall picture to see whether an abuse exists in litigating issues which could have been raised in earlier proceedings is now the prevalent view in many common law jurisdictions : see, e.g. Brisbane City Council v. Attorney General For Queensland [1979] AC 411, where at 425, Lord Wilberforce said that the true basis for the doctrine was abuse of process "and 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".

25. A recent statement in relation to res judicata in its wider sense (in Hong Kong, often referred to as the "Yat Tung" principle; sometimes also referred to as "Henderson v. Henderson" abuse of process) is contained in the decision of the House of Lords in Johnson v. Gore Wood & Co. (a firm) [2001] 2 WLR 72 where at 90A-E, Lord Bingham of Cornhill said :

"... But Henderson v Henderson abuse of process, as now understood, although separate and distinct from cause of action estoppel and issue estoppel, has much in common with them. The underlying public interest is the same: that there should be finality in litigation and that a party should not be twice vexed in the same matter. This public interest is reinforced by the current emphasis on efficiency and economy in the conduct of litigation, in the interests of the parties and the public as a whole. The bringing of a claim or the raising of a defence in later proceedings may, without more, amount to abuse if the court is satisfied (the onus being on the party alleging abuse) that the claim or defence should have been raised in the earlier proceedings if it was to be raised at all. I would not accept that it is necessary, before abuse may be found, to identify any additional element such as a collateral attack on a previous decision or some dishonesty, but where those elements are present the later proceedings will be much more obviously abusive, and there will rarely be a finding of abuse unless the later proceeding involves what the court regards as unjust harassment of a party. It is, however, wrong to hold that because a matter could have been raised in earlier proceedings it should have been, so as to render the raising of it in later proceedings necessarily abusive. That is to adopt too dogmatic an approach to what should in my opinion be a broad, merits-based judgment which takes account of the public and private interests involved and also takes account of all the facts of the case, focusing attention on the crucial question whether, in all the circumstances, a party is misusing or abusing the process of the court by seeking to raise before it the issue which could have been raised before. As one cannot comprehensively list all possible forms of abuse, so one cannot formulate any hard and fast rule to determine whether, on given facts, abuse is to be found or not."

26. The following important points arise from Johnson :

(1) First, it rejects as too dogmatic what has long been one of the criticisms of Yat Tung, namely, the statement in Lord Kilbrandon's speech that an abuse of process occurs "to raise in subsequent proceedings matters which could and therefore should have been litigated in earlier proceedings" (emphasis added) : see Johnson at 90D per Lord Bingham of Cornhill; at 118G-119A per Lord Millett. The test of whether there is abuse should be "a broad, merits-based judgment which takes account of the public and private interests involved and also which takes account of all the facts of the case, focusing attention on the crucial question whether, in all the circumstances, a party is misusing or abusing the process of the court by seeking to raise before it the issue which could have been raised before" : see Johnson at 90D. I note that in one Court of Appeal judgment in Hong Kong, it seems to have been assumed that merely because a point could or might have been taken in previous proceedings did not automatically mean that it should have been taken : see Tsang Yu v. Tai Sang Container Cold Storage and Wharf Limited [2000] 1 HKLR 780 at 784A-I.

(2) Secondly as to what constitutes an abuse of process, while it is obviously undesirable to set out an exhaustive list (see Hunter v. Chief Constable of the West Midlands Police [1982] AC 529, at 536 per Lord Diplock), chief among the factors that the court should consider is whether the bringing of new proceedings constitutes an unjust harassment of the other party : see Johnson at 90C-D.

27. The case of Yat Tung poses special problems unique to the courts in Hong Kong. Being a decision of the then highest court in Hong Kong and also having been followed on numerous occasions at all levels of courts here, Yat Tung is binding on me. The broad statements of principles contained in that case to which I have already referred, are therefore binding. That said, I leave open for argument in a future case whether these statements of principle can properly be reconciled with other authorities from common law jurisdictions, some of which I have also referred to above. This is ultimately a matter for a higher court to resolve. The reason why I am content to deal with it in this way is because whether the present application is dealt with solely by reference to Yat Tung principles or to what are arguably less rigid principles, the result is the same : the present action in my view is an abuse of the process of the court and should be struck out.

Reasons for striking out the plaintiff's claim in the present action

28. In my judgment, the plaintiff's claim in the present action should be struck out and the action dismissed :

(1) As I have already recorded, the issue of the defendants' negligence and breach of retainer was precisely the issue before the District Court in the 2nd Action, this being reflected in the pleadings.

(2) However, when the matter came on for trial before Judge Yung, it would appear that the only aspect of the defendants' alleged negligence and breach of retainer that was pursued by the plaintiff was the wrong listing of the action. The plaintiff confirms this to be the case in his affidavit dated 25 January 2002 served in opposition to the defendants' summons. The learned judge's decision, in so far as the issue of the defendants' negligence and breach of retainer was concerned, could therefore only have been in relation to the listing aspect. I am accordingly content to approach the present application on the basis that Judge Yung did not deal with any other aspect of the alleged negligence and breach of retainer on the defendants' part, although I recognize the possibility that the learned judge may have decided these further aspects in the defendants' favour when he ordered that the 2nd defendant's professional charges (as counterclaimed), for which he held the plaintiff liable to pay, be further assessed. It will be remembered that the 2nd defendant's counterclaim contained references to the Prohibition Order aspect of the case. However, this is not the way that Mr Bowers, who appears for the defendants, approached the matter, so I am content to deal with it in the way that the plaintiff has urged me to approach the application, i.e. on the basis that no other aspect of the plaintiff's negligence and breach of retainer was adjudicated upon by Judge Yung other than the listing aspect. Res judicata in its narrow sense, therefore, is inapplicable in the present case.

(3) On the basis then that the court is concerned only with applying res judicata in its wider sense, it is first necessary to examine the reasons for the plaintiff not pursuing in the 2nd Action his other claims against the defendants for negligence and breach of retainer. In his affidavit, the plaintiff refers to the fact that it was not until Judge Poon gave judgment in the 1st Action (DCEO 2/1999) that the question of costs relating to the Prohibition Order was settled. It is further said that it was not until mid October 2001 that the plaintiff and his counsel were able to form a preliminary view on the total damages payable in relation to the Prohibition Order. Therefore, so it is argued, this aspect of the defendants' negligence or breach of retainer could not have been pursued before Judge Yung for his decision.

(4) However, the trial before Judge Yung took place in October 2001. By that time, on his own evidence, the plaintiff already knew of his liability in relation to the costs of the Prohibition Order application and this had in fact been known since 6 April 2001. The plaintiff frankly acknowledged in argument before me that he was aware of the complaints he now makes in this action against the defendants, before the trial of the 2nd Action. He could not really assert otherwise. The documents show that as from February 1999 when the retainer had terminated, he had continually made complaints in relation to the defendants' conduct in the Prohibition Order proceedings. The plaintiff then argued that at the time the 2nd Action was tried by Judge Yung, Judge Poon's decision in the 1st Action was still under appeal and if this appeal had succeeded, there would then have been no need to make a claim against the defendants for damages arising from the obtaining of the Prohibition Order. That appeal was not determined by the Court of Appeal until 8 November 2001, well after Judge Yung's decision in the 2nd Action.

(5) I am unable to accept the plaintiff's explanation or arguments as a sufficient reason for not pursuing the claims based on the Prohibition Order in the 2nd Action. First, there was no certainty that the plaintiff's appeal in the 1st Action would succeed anyway. Secondly, and more important, the issue of the Prohibition Order and the material non-disclosure in obtaining it was not even raised in the appeal and therefore was not before the Court of Appeal for decision in the first place. The notice of appeal, which was drafted by counsel, did not in any way seek to overturn Judge Poon's findings and conclusions regarding the Prohibition Order. There was accordingly in these circumstances no event or contingency that could realistically have held up the plaintiff making a claim against the defendants in the 2nd Action in relation to the Prohibition Order. I should perhaps just add at this point that following the Court of Appeal's decision in the appeal from Judge Poon's judgment, the Court on 22 March 2002 dismissed the plaintiff's application for leave to appeal to the Court of Final Appeal.

(6) Furthermore, in Mr Bowers' affidavit in support of the present summons, he makes reference to the fact that on a number of occasions prior to the trial of the 2nd Action, he had told the plaintiff that any claims he had against the defendants regarding the Prohibition Order should be dealt with in the 2nd Action and that if they were not, in view of his pleaded case in that action, the plaintiff would not be able to bring a fresh action based on such claims. The plaintiff's affidavit, made subsequent to Mr Bowers' affidavit, does not contradict this. In his oral submissions to me, however, the plaintiff said, for the first time, that this part of Mr Bowers' affidavit was untrue. He told me that he had simply not read the affidavit. Be that as it may (and I have considerable misgivings in accepting such submissions), what cannot be disputed, however, is that by a letter dated 17 August 2001 (well before the trial of the 2nd Action), the plaintiff wrote to the defendants' solicitors making reference to a claim that he intended to make at that stage, i.e., in relation to the Prohibition Order. It was, as he termed it, a letter before action. A deadline of 31 August 2001 was given to the defendants in that letter to settle the claim. The reply from Messrs Deacons dated 20 August 2001 was to make it clear to the plaintiff that if he instituted any proceedings based on the Prohibition Order, the defendants would apply to strike out the new action on the basis that it would be frivolous, vexatious and an abuse of the process of the court.

(7) I should finally add out of completeness that in relation to those claims other than the Prohibition Order claim, I also regard as an abuse any attempt to raise them now. There was no reason not to have had these claims dealt with in the 2nd Action if the plaintiff had so wished. To raise them now would be unjust to the defendants. In any event, as I have already said, the plaintiff submitted to me that his only complaint in the present action was really in respect of the Prohibition Order.

29. I am satisfied that the present action constitutes an unjust harassment of the defendants. There has already been a trial involving the same parties dealing with the question of the defendants' alleged negligence and breach of retainer in relation to the 1st Action. Judgment has already been given (and in the plaintiff's favour as well). The plaintiff has had his day in court. The defendants are entitled in my view to expect finality in the litigation between them and the plaintiff regarding this aspect.

Order

30. For the above reasons, I dismiss the plaintiff's appeal from Master H.C. Wong. I also make an order nisi that the plaintiff pay the defendants' costs of and occasioned by the appeal, such costs to be taxed if not agreed.