PATHAK RAVIDUTT v. SANJEEV MAHESHWARI

DCCJ 3031/2009

IN THE DISTRICT COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

CIVIL ACTION NO. 3031 OF 2009

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REASONS FOR JUDGMENT

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Introduction

1. This was an application of the defendant by summons taken out on 26 November 2009 (“the Summons”) seeking to invoke the court’s discretion under O.18 r. 19, Rules of the District Court, Cap. 336 and inherent jurisdiction to strike out the Statement of Claim either in its entirety or alternatively, paragraph 27 and/or paragraph 28 thereof.

2. At the conclusion of the hearing, the defendant’s application was dismissed with costs to the plaintiff summarily assessed at HK$78,000. My reasons appear below.

Undisputed Background Facts

3. This action has a textured history but, for the purpose of this application, an outline of the board shape of this case will suffice.

4. Both the plaintiff and the defendant are Indian by nationality. The defendant resided in Hong Kong. The defendant met the plaintiff in India and brought the plaintiff to Hong Kong to work for him on or about 14 June 2007.

5. The defendant was a diamond trader and operated a diamond company on the 8^th floor of Wing Lee Building, Tsim Sha Tsui. His family including the plaintiff resided on the 5^th floor of the same building. The plaintiff worked as a domestic helper for the defendant and there was a written employment contract whereby the plaintiff was engaged as a domestic helper.

6. On 19 November 2007, the plaintiff was arrested by the police due to the defendant’s allegation that the plaintiff had committed theft of diamonds of the defendant of about HK$2 million. On the same day, the plaintiff’s employment with the defendant was terminated.

7. The plaintiff was subsequently charged with one count of theft and he was refused bail throughout. He was tried in the District Court after being remanded 9 months in custody. The defendant testified for the prosecution. The plaintiff was acquitted after trial on 18 August 2008.

8. The plaintiff filed a Form 2 with the Labour Tribunal and commenced proceedings against the defendant under LBTC 3653 of 2008 on 29 September 2008 in respect of his employment with the defendant as domestic helper (“the first action”). He filed a statement of claim setting out all his complaints whilst expressly reserving all his rights to claim damages and other relief against the defendant in the future.

9. The first action was settled on 24 October 2008 when it was heard by the learned Principal Presiding Officer in the Labour Tribunal. From the transcript of the hearing on 24 October 2008, it can be seen that the settlement was made with an express reservation of the plaintiff’s right to make claims against the defendant in the future. Pursuant to the settlement agreement, the defendant paid the plaintiff a sum of HK$24,500 on the same day.

10. On 19 May 2009, the plaintiff commenced another set of proceedings against the defendant in the Labour Tribunal under LBTC 3558 of 2009 (“the second action”).

11. The defendant filed a statement on or about 10 June 2009. There, the defendant made the plea of res judicata.

12. The second action was heard by the learned Principal Presiding Officer again on 11 June 2009.  Despite the good advice rendered by the learned Principal Presiding Officer, the plaintiff refused to settle the second action with the defendant. The second action was transferred to the District Court on the same day and hence the present action.

The Present Application and Relevant Legal Principles    

13. All the grounds set out under O.18 r.19(1) are relied upon in the Summons. As rightly pointed by Mr. Sadhwani, counsel for the plaintiff, this scattergun approach is both unhelpful and inappropriate.

14. As is apparent from the supporting affirmations, the plaintiff actually relies on the sole ground of res judicata in this application. Mr. Tibbo, counsel for the defendant, helpfully confirmed that the only ground of the present application is the plea of res judicata.

15. The legal principles relating to striking out applications and the doctrine of res judicata are well-established and I do not understand the parties to differ on them.

16. For a striking out application to succeed, the defendant accepted that he has the onus to prove that it is a plain and obvious case that the plaintiff’s claim should be struck out. 

17. For the doctrine of res judicata,  good summaries of the law can be found in the following authorities referred to me by Mr. Sadhwani: Ngai Few Fung v. Cheung Kwai Heung, unreported, CACV 147 of 2007, 7 December 2007, Wong Yu Cho Rolly trading as The Hong Kong Museum of Stone Sculpture & Asian Art v. Lam Kwok Man, unreported, DCCJ 5422/2006 and Mohammad Bashir v. Kam Hoi International Industrial Limited, unreported, DCPI 401/2006, 6 February 2009. I do not find it necessary to set them out here and it suffices for me to state the following dicta which are of particular relevance:

(1)  “The plea of res judicata applies, except in special cases, not only to points upon which the court was actually required by the parties to form an opinion and pronounce a judgment, but to every point which properly belonged to the subject of litigation, and which the parties, exercising reasonable diligence, might have brought forward at that time.” Henderson v. Henderson (1843) 3 Hare 100 at p.115 per Wigram V.C. 

(2)  “But there is a wider sense in which the doctrine may be appealed to, so that it becomes an abuse of power to raise in subsequent proceedings matters which could and therefore should have been litigated in earlier proceedings.” Yat Tung Investment Co. Ltd v. Dao Heng Bank Ltd. and Anor. [1975] A.C. 581 at p.590 per Lord Kilbrandon.

(3)  “There will rarely be a finding of abuse unless the later proceedings 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.”  Johnson v. Gore Wood & Co (a firm) [2001] 2 WLR 72 per Lord Bingham at p.90

(4)  “It is one thing to refuse to allow a party to relitigate a question which has already been decided; it is quite another to deny him the opportunity of litigating for the first time a question which had not previously been adjudicated upon. …. The burden should always rest upon the defendant to establish that it is oppressive or an abuse of process for him to be subjected to the second action.” Johnson v. Gore Wood & Co (a firm), supra, per Lord Millett at p.118.

18. With these principles in mind, I proceed to analyse the relevant facts of the present application.

Is the Second Action an Abuse of Process?

19. At the outset of the hearing, Mr. Tibbo explained that the fundamental objection of the defendant to the institution of the second action was that all the claims therein should have been made in the first action and dealt with in one go in October 2008. He submitted that it was an abuse of process and the defendant should not be vexed again by the second action.

20. To assess the validity of this objection, it is necessary to have an understanding of the nature of the second action. There, the plaintiff prays for the relief which I reproduce in their original wordings below:

(1)  The amounts as particularized in paragraph 28 hereinabove (fraudulent misrepresentation); 

(2)  Further, and in the alternative, damages;

(3)  Further, and in the alternative, damages to be assessed on losses sustained from the constructive dismissal, including damages of financial losses sustained and/or continuing in being unable to find or return to a job in the diamond trade due to the stigma of the false accusations of theft and consequential imprisonment;

(4)  Damages to be assessed for loss of promotional prospects;

(5)  Further, and in the alternative, wages under the Employment Contract from the time of the arrest to-date due to the plaintiff being obliged to remain in Hong Kong to pursue his claim against the defendant and being unable to work;

(6)  Further or in the alternative, reimbursement of living and traveling expenses from the time of the arrest of to-date in being obliged to remain in Hong Kong to pursue a claim against the defendant and being unable to work;

(7)  Damages for ill treatment and humiliation due to exploitative and  oppressive treatment and for the wrongful false accusation of theft  and consequent imprisonment;

(8)  Costs;

(9)  Interest;

(10) Further or other relief.

21. In a nutshell, the plaintiff’s case is that by reason of the defendant’s false representations made to him in India, he was conned into quitting his job as a specialized diamond assorter and dealer in India and coming to Hong Kong to work for the defendant as a diamond assorter cum trading/dealing salesman.

22. The plaintiff contends that there was an oral employment contract subsisting between the plaintiff and the defendant in addition to the written employment contract as a domestic helper, which the plaintiff sued upon in the first action. Due to his incarceration pending his criminal trial, he was constructively dismissed by the defendant as a diamond assorter cum trading/dealing salesman and suffered from loss and damage as a result.

23. Mr. Sadhwani clarified that in the second action the plaintiff relies on malicious prosecution and seeks to recover damages including stigma compensation.

24. I do have difficulties with the statement of claim and do not find the present state of the statement of claim satisfactory at all. However, given Mr. Sadhwani’s indication that it would be amended shortly if it survived the striking out application and Mr. Tibbo’s confirmation that the only issue in this application is the “abuse of process” complaint, it is not necessary for me to further comment on the integrity of the statement of claim.

25. Mr. Tibbo submitted that the particulars in the second action are clearly facts that were known to the plaintiff at the time when the plaintiff brought the first action. Mr. Sadhwani did not argue otherwise. Mr. Tibbo further submitted that the particulars in the second action could and should have been pleaded in the first action. In other words, the wider sense of the doctrine of res judicata expounded in the Yat Tung case applies.

26. Mr. Tibbo also prepared a comparison table setting out the common matters pleaded in the statement of claim filed in the first action and that of the second action. It should be noted that though the same complaints appeared in the statement of claim filed in the first action, the settlement was made in relation to the plaintiff’s claim made under his employment contract as a domestic helper only and the plaintiff expressly reserved his right to make other claims against the defendant in the future.

27. By such an express reservation, Mr. Sadhwani submitted that the door for the plaintiff to make claims in the future was left open and accepted by the parties and so there is no res (meaning the thing) for the res judicata (meaning the thing has been decided) doctrine to bite. The plaintiff does not seek to reopen any matters as they are not closed in the first place.

28. I can see the force of this submission when the narrow sense of the doctrine of res judicata is to apply to the present case. The claims in the second action case were not settled and therefore there is no issue of reopening.

29. As far as the wider sense of the doctrine of res judicata is concerned, Mr. Sadhwani submitted that such an express reservation serves to be a warning to the defendant that the second action was likely. Hence, the second action could not be an abuse of process.

30. I am unable to agree to this submission. Though forewarned is forearmed, a warning of an abuse of process itself cannot possibly change the very nature of and/or otherwise justify an abuse of process. If the second action is indeed an abuse of process, it matters not that the defendant has been forewarned of the second action.  

31. However, for the following reasons, I am not persuaded that the second action is clearly and plainly an abuse of process at all.

32. Firstly, the second action could not have been dealt with in the Labour Tribunal and is thus in any event inevitable. The causes of action apparent in the statement of claim filed in the second action comprise deceit, malicious prosecution and breach of an oral employment contract. For deceit and malicious prosecution, they are torts and any such tortuous claim is outside the jurisdiction of the Labour Tribunal: para. 3 of the Schedule to the Labour Tribunal Ordinance, Cap.25.

33. Mr. Tibbo accepted that the second action has to be resolved in the District Court anyway. He then contended that the plaintiff should have made all the complaints in the first action so that the first action could have been transferred to the District Court in one go.

34. What Mr. Tibbo suggested may be a better course. Yet, it should be noted that the plaintiff acted in person in the first action in the Labour Tribunal and he was well entitled to pursue a simple and straightforward claim under his written employment contract and have it resolved and/or settled summarily there.  In the end, he indeed got what he wanted in the Labour Tribunal and he was prudent enough to expressly reserve his rights to further claim against the defendant.

35. As regards the plaintiff’s claim under the alleged oral employment and the two causes of action founded in tort, they are certainly more complicated, bound to be controversial and not easily amenable to settlement. The Labour Tribunal is not an appropriate forum. I can understand why the plaintiff decided not to deal with these claims together with the simple claim in the first action.

36. The plaintiff was criticized that he should not have commenced the second action in the Labour Tribunal. Mr. Tibbo told this court that the plaintiff had been in fact all along assisted by lawyers even in the Labour Tribunal and should not be excused for his wrong decision to institute the second action in the Labour Tribunal. Be that as it may, it was at worst a procedural irregularity and in no way indicative of the plaintiff’s intention to abuse the process by commencing the second action at all.

37. Mr. Tibbo tenaciously took me through the transcript of the hearing of the second action in the Labour Tribunal on 11 June 2009. There, the learned Principal Presiding Officer appeared not to think highly of the plaintiff’s claims in the second action.   

38. Yet, the relevant question in the present application is whether the second action is an abuse of process. The second action is now in the right forum. I do not agree that it is an abuse of process in itself, regardless of its merits.  The validity of the plaintiff’s claims in the second action should be allowed to be tested in the conventional manner and cannot be disposed of summarily.

Conclusion

39. In summary, on the evidence, the defendant has failed to discharge the onus to show a clear and plain case that the second action is an abuse of process. The defendant’s application, as it stands, has to be dismissed accordingly.