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

DCCJ 2807/2007

IN THE DISTRICT COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

CIVIL ACTION NO. 2807 OF 2007

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DCCJ 2808/2007

IN THE DISTRICT COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

CIVIL ACTION NO. 2808 OF 2007

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DECISION

1.  The Defendants apply in the present two actions to strike out the statement of claim endorsed on the writ of summons issued on 28 June 2007 under Order 18 r. 19 of the Rules of District Court.  The Defendants claim that the Plaintiff’s statements of claim in the two actions disclosed no reasonable cause of action, are frivolous and vexations and an abuse of process of Court.

2.  The summonses to strike out were issued on 24 July 2007.  They were adjourned by Acting Registrar Ko on 6 August 2007 to be heard together on 30 November 2007.  At the Plaintiff’s request, the hearing was further adjourned to 15 January 2008.

Background

3.  On 24 August 2004, the Plaintiff took out a writ of summons against the Inland Revenue Department (“IRD”) for illegally freezing his bank accounts and trespassing into his premises under DCCJ No. 4492 of 2004 (“action 4492”).  The IRD filed and served a defence and counterclaim for unpaid assessed tax in the sum of $831,600 with interests against the Plaintiff on 24 September 2004.

4.  The Plaintiff (“Mr. Wong”) applied in action 4492 by summons for an extension of time to file a reply and defence to counterclaim.  The summons was heard by Master Ko (as he then was) on 27 October 2004 (“the 27 October 2004 hearing”).  At the end of the hearing, Master Ko, with the consent of Mr. Ho Chi Sum, Government Counsel appearing on behalf of the Defendants, granted an extension of 28 days to the Plaintiff.

5.  On the basis that the Plaintiff failed to file a reply and defence to counterclaim before the expiry of 28 days, the Defendants obtained a default judgment on the Defendants’ counterclaim against the Plaintiff on 30 December 2004 in action 4492 (“the default judgment”).

6.  Mr. Wong applied to set aside the default judgment.  The application was heard and dismissed by my brother judge, H.H. Judge Chow, on 20 June 2005.  Upon failing to obtain leave to appeal to the Court of Appeal from Hon. Justice Cheung J.A. on 17 November 2005, Mr. Wong renewed his application to the Court of Appeal under HCMP 2032 of 2005.  His application for leave to appeal was refused by Hon. Justices Yuen and Tang JJA on 7 March 2006.

7.  In Mr. Wong’s application to set aside the default judgment, he alleged that he had informed Master Ko and Mr. Ho Chi Sum at the 27 October 2004 hearing that he and his family was under a threat of kidnap and he was put under police protection at the time, therefore, he required an extension of time to file the reply and defence to counterclaim.  He claimed Mr. Ho had agreed outside Master Ko’s court “to temporary set aside DCCJ 4492 of 2004” until further notice from him (“the agreement”).  Mr. Wong claimed Mr. Ho was consequently in breach of the agreement and the default judgment should be set aside.

8.  Mr. Ho in his affirmation of 24 July 2007 denied he had agreed to anything like what Mr. Wong alleged.  He claimed he had only agreed to Mr. Wong’s request for 28 days extension for the filing of a reply and defence to counterclaim in action 4492 on 27 October 2004.  He had informed Master Ko at the hearing that he had no objection to Mr. Wong’s request for an extension of 28 days.  He had further told the Master at the hearing that judgment will be applied for should the Plaintiff failed to file the reply and defence to counterclaim after 28 days (see Ho’s affirmation and exhibit HCS-1).

9.  These allegations were repeated at the Court of Appeal hearing before Hon. Justices Yuen and Tang JJA on 28 February 2006.  References were made to these allegations at paras. 15-17 of the judgment of Hon. Justice Yuen JA (p. 87 of the documents bundle).

10.  On 22 May 2007 and 22 June 2007, Mr. Wong took out three summonses to set aside the default judgment of 30 December 2004 under action 4492 and to amend the writ of summons.  He further sought leave to amend the statement of claim alleging he was misled by Mr. Ho and the IRD.  The 3 summonses were dismissed by Master K.W. Wong at the hearing on 25 June 2007.  Mr. Newton Chan was the Government Counsel representing the defendants at the hearing before Master K.W. Wong on 25 June 2007.

11.  The Plaintiff commenced a new action against Mr. Ho and the IRD in the Court of First Instance under HCA 2132 of 2005 claiming for damages for breach of agreement by Mr. Ho.  The statement of claim was struck out and the action dismissed by Registrar Chan on 30 June 2006.  Mr. Wong appealed against the order of Registrar Chan.  The appeal was heard and dismissed by Mr. Justice Chung on 21 February 2007.  The application for leave to appeal to the Court of Appeal was dismissed by Hon. Justice Yeung on 31 October 2007.

DCCJ 2807 of 2007

12.  In this action, Mr. Wong claimed against Mr. Ho, the IRD and the Commissioner of Inland Revenue Department for damages for Mr. Ho’s breach of agreement and for misleading the Court on 29 March 2005 by denying the Plaintiff had submitted a copy of the reply and defence to counterclaim after the default judgment was entered and against the IRD for wrongfully freezing his personal and business bank accounts on 16 August 2004.

DCCJ 2808 of 2007

13.  Mr. Wong claimed against Mr. Newton Chan for ignoring his summons to add two Defendants, Mr. Ho and the Commissioner of IRD, and misleading Master K.W. Wong on 25 June 2007.

The Law

14.  Page 348 of the Hong Kong Civil Procedure 2008 practice notes under 18/9/6 said:-

“	No reasonable cause of action –
	A reasonable cause of action means a cause of action with some chance of success when only the allegations in the pleading are considered (per Lord Pearson in Drummond – Jackson v. British Medical Association [1970] 1 WLR 688 C.A.).”

15.  18/19/8 said:-

“	The expression “frivolous and vexations” includes proceedings which are an abuse of the process.  A proceeding is frivolous when it is not capable of reasoned argument, without foundation or where it cannot possibly succeed.  A proceeding is vexations when it is oppressive and/or lacks bona fides.”

Res Judicata

16.  Mr. Wong’s claim against Mr. Ho, the IRD and the commissioner is based on Mr. Ho’s breach of the 27 October 2004 agreement and obtaining judgment in default of defence to counterclaim on 30 December 2004.  This had been raised at the application to set aside the default judgment before Judge Chow on 29 March 2005, it was raised again at the application of leave before Hon. Justices Yuen and Tang JJA on 25 February 2006.  The allegation had been carefully examined by the Court of Appeal (see para. 27 of Hon. Justice Yuen JA’s judgment at p. 89 of the bundle).

17.  Furthermore, Mr. Wong had made the same allegation in HCA 2132 of 2005 against Mr. Ho and the IRD.  The basis of Mr. Wong’s action was the alleged breach of agreement of 27 October 2004 by applying for and entering the default judgment in action 4492.  In his judgment dismissing the appeal against Registrar Chan’s order dismissing Mr. Wong’s claim, Mr. Justice Chung found Mr. Wong’s arguments to be untenable, he said in p. 9 of his judgment:-

“	26.	First, the main issue in this action, namely, the alleged agreement reached between the parties on 27 October 2004, has clearly been determined by the courts earlier.  It is obvious that when the courts concluded the default judgment in the tort claim was a regular judgment, they must have made a finding adverse to the plaintiff’s claim that an agreement has been reached between him and the 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)”

18.  Chung J. held at para. 28 of his judgment that the IRD being named a defendant in the tort claim (action 4492), the leave application and the High Court action; and Mr. Ho, though not named as a defendant in the tort claim or the leave application, was the same person who allegedly entered into an agreement with Mr. Wong on 27 October 2004, can be regarded as “parties to the proceedings for the purpose of the doctrine of res judicata”. 

Abuse of Process

19.  I find that Mr. Wong by commencing this action against the Defendants is indeed guilty of mounting a collateral attack upon a final decision against the plaintiff which has been made by another court of competent jurisdiction in previous proceedings in which the plaintiff had a full opportunity of contesting the decision in the court by which it was made.  This was the finding of Lord Diplock in Hunter v. Chief Constable of the West Midland Police [1982] AC 529 at 541B-C where Lord Diplock held the action to be an abuse of process of court.  In the present actions, Mr. Wong is guilty of the same conduct.  To allow the two actions to continue would be an abuse of process of court.

20.  I am satisfied Mr. Wong had more than exemplified the collateral attack by repeatedly making the same allegation against Mr. Ho at the application to set aside judgment, the application for leave to appeal, the HCA 2132 of 2005 and in the present action.

DCCJ 2808 of 2007

21.  Mr. Wong claimed in this action that Mr. Chan had misled Master Wong to focus on the default judgment of 30 December 2004 and Judge Chow’s decision refusing to set aside the default judgment, and ignored the two other defendants in action 4492.  I find the allegations of “misleading” Master Wong to be frivolously made.  Mr. Chan does not owe any duty to Mr. Wong as he represented Mr. Wong’s opponents in these proceedings.  The fact that he is a government counsel does not mean he has a duty to advise members of the public, particularly the individual who has been claiming against Mr. Chan’s clients.  Further, Master Wong could not have been misled at the hearing when Mr. Wong admitted he had failed to file and serve a reply and defence to counterclaim within time.

22.  Mr. Leung, Government Counsel representing the Defendants, at the hearing accepted that Mr. Wong’s substantive claim had not been dealt with though judgment on the Defendants’ counterclaim had been entered. 

23.  Mr. Wong, at the close of his submission, made a last minute oral application to ‘merge’ the present action with action 4492.  He claimed he had been silenced by the RAO and RPO imposed by H.H. Judge M. Chan on 12 November 2007.  The restricted proceedings order relates to the counterclaim in action 4492 and a number of other actions in the District Court; the restricted application order relates to action 4492, DCCJs 3884 and 3915 of 2006.

24.  Judge Chan’s order prohibited all further proceedings and applications relating to a list of District Court actions commenced by Mr. Wong for reasons fully set out in her decision.  If Mr. Wong feels aggrieved and considers he has good grounds he would no doubt take such appropriate actions as he sees fit.

25.  So far as the application to ‘merge’ which I understand he meant to ‘consolidate’ the two actions, it is but a last minute attempt to raise the same issue of the alleged ‘agreement’ on 27 October 2004 in action 4492.  This should not be allowed in view of the RAO against him and also for the reasons set out above.  Repeating the claim in a fresh action would be against the doctrine of res judicata and the mounting of a collateral attack on the Defendants including the Commissioner of IRD whose department had been a party in action 4492 and HCA 2132 of 2005.  The application is therefore refused.

Conclusions

26.  For reasons set out above it would be against the doctrine of res judicata if Mr. Wong is permitted to raise the same issues in pursuing DCCJ 2807 of 2007 against Mr. Ho, the IRD and the Commissioner of IRD.  It is an abuse of process of Court.  The statement of claim and the writ of summons is hereby struck out.

27.  For reasons set out above, I find Master Wong was not misled at the 25 June 2007 hearing when he dismissed the three summonses to amend the claim against Mr. Ho and the IRD based on the allegation of the 27 October 2004 agreement.  Neither was Master Wong misled in refusing to set aside the default judgment of 30 December 2004 for there is no jurisdiction for him to do so.  Mr. Chan owed no duty to the Plaintiff as his duty was to his client Mr. Ho and the IRD.

28.  I hold that the two statements of claim and writs of summons in 2807 and 2808 of 2007 disclosed no reasonable cause of action, are frivolous and vexation and an abuse of process of court.  I hereby grant the orders sought by the Defendants and strike out the two statements of claim and the two actions.

29.  Costs – I can see no reason why costs should not follow the event.  The Plaintiff shall pay the costs of the Defendants to be taxed if not agreed.