SURSON DEVELOPMENT LTD v. SHUI HING (NG LUN) CONSTRUCTION LTD AND ANOTHER

HCCT 72/2000

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

CONSTRUCTION AND ARBITRATION PROCEEDINGS

NO. 72 OF 2000

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J U D G M E N T

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1.  This is an appeal to strike out the pleading against the 2^nd Defendant on the ground mentioned in the 2^nd Defendant’s affidavit in support, namely that, in obtaining the judgment against the 1^st Defendant, the Plaintiff considered that its contract was with the 1^st Defendant and not with the 2^nd Defendant.

2.  In those circumstances, if the Plaintiff contracted only with the 1^st Defendant, the Plaintiff has no contractual right of action against the 2^nd Defendant.  Since the Plaintiff’s claim against the 2^nd Defendant is based on an alleged contractual right of action, it follows that the Plaintiff’s claim against the 2^nd Defendant cannot succeed.  The Plaintiff’s claim against the 2^nd Defendant is thus scandalous and vexations and constitutes an abuse of the court.

3.  There is another principle which applies.  I think a strike-out is also justified on this second reason.  That principle is to be found in Article 84 of Bowstead & Reynolds on Agency (17^th ed), pp 373-4.  The principle deals with merger and election.  Article 84 reads: -

“(1)    Where an agent enters into a contract on which he is personally liable and judgment is obtained against him on it, the judgment, though unsatisfied, is so long as it subsists, a bar to any proceedings against the principal, undisclosed or (perhaps) disclosed, on the contract.

(2)     (Perhaps), where an agent enters into a contract on behalf of undisclosed principal on such terms that he is personally liable on it together with his principal, and the other contracting party, knowing or discovering who is the real principal, elects to pursue his rights against the agent, he is bound by his election, and cannot afterwards sue the principal on the contract.  The question whether or not he has so elected is a question of fact.

(3)     Except as provided in this Article, the liability of the principal, whether disclosed or undisclosed, upon a contract made on his behalf is not affected by the fact to the agent is personally liable on the contract.”

4.  In this particular case, the Plaintiff has sued and obtained judgment against the 1^st Defendant.  It is on the basis of that judgment against the 1^st Defendant that the Plaintiff sought to garnishee alleged payments due from the 2^nd Defendant to the 1^st Defendant. 

5.  Applying the principle in Bowstead & Reynolds, it seems the Plaintiff has obtained judgment against a person who on the Plaintiff’s own pleading is alleged to be an agent of the 2^nd Defendant.  The Plaintiff elected to sue the alleged agent.  Therefore, so long as that judgment subsists and it continues to subsist, that judgment is a bar to any proceedings against the alleged principal which is the 2^nd Defendant.

6.  I accordingly conclude that the Plaintiff’s claim against the 2^nd Defendant is an abuse of process on the additional basis of the doctrine of election.

7.  For those reasons, I think it is appropriated to strike out the Plaintiff’s claim against the 2^nd Defendant.  The Plaintiff’s claim against the 2^nd Defendant is dismissed.

8.  The costs of the application and of the action be to the 2^nd Defendant to be taxed if not agreed.