WONG YU CHO ROLLY t/a MARCO POLO and CHINA OVERSEA TECHNICAL DEVELOPMENT v. INLAND REVENUE DEPARTMENT

DCCJ 4492 / 2004

IN THE DISTRICT COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

CIVIL ACTION NO. 4492 OF 2004

------------------------------

------------------------------

------------------------------------------------------

REASONS FOR DECISION

------------------------------------------------------

1.  The Plaintiff (“Mr Wong”) issued the present action in August 2004 against the Inland Revenue Department (“IRD”), claiming damages for its alleged wrongful freezing of his accounts for failing to pay tax, and for trespass by IRD’s staff of his premises.  Mr Wong says the tax assessment was wrong, as the companies he was trading did not incur any profit for the relevant years. 

2.  This is the hearing of Mr Wong’s appeals under three Notices of Appeal all dated 9 August 2007, seeking to appeal against Master K W Wong’s decision to dismiss his:

(1)	application made under a Summons dated 22 May 2007 to set aside the default judgment based on the counterclaim herein entered against him on 30 December 2004, and
(2)	applications made under two Summonses both dated 22 June 2007 to amend the Writ and the Reply and Defence to Counterclaim to (a) add Mr Ho Chi Sum, the Senior Government Counsel previously acting for the IRD in the present proceedings, and the Commissioner of IRD as the 2nd and 3rd Defendants, and (b) introduce new claims against them for damages .

3.  In order to properly deal with Mr Wong’s appeals, it is necessary for me to briefly set out the procedural background of the present and various related proceedings.

Background

4.  On 24 September 2004, IRD filed a Defence and Counterclaim under the present action, counterclaiming Mr Wong for tax in the sum of HK$831,600.00.  On 27 October 2004, Master Ko gave 28 days extension of time to Mr Wong to file a Reply and Defence to the Counterclaim.  At the hearing before Master Ko, IRD’s then counsel, Mr Ho Chi Sum, expressly said that the IRD would apply to enter default judgment against Mr Wong if the Defence to Counterclaim was not filed within that period.  That was not filed.  On 30 December 2004, default judgment against Mr Wong in the sum of HK$831,600.00 was granted.

5.  On 29 March 2005, Mr Wong’s application to set aside the default judgment was heard before H. H. Judge Chow.  The application was dismissed. Mr Wong’s application for leave to appeal against H H Judge Chow’s said decision was respectively refused by the learned judge on 9 September 2005, Hon Cheung JA on paper on 17 November 2005 and Hon Yuen and Tang JJA on 7 March 2006 under HCMP 2032/2005.  His application for leave to appeal to the Court of Final Appeal was also rejected on 4 September 2006 under FAMV 23/2006.

6.  In all of these applications to set aside the default judgment, Mr Wong relies on the fulcrum ground that Mr Ho orally agreed with him on 27 October 2004 outside Master Ko’s court room that the proceedings under the present action would be stayed (or in his words “set aside”) until he gave further notice, because at that time there was an attempted kidnap of him and his family, and he had to be relocated overseas for that time being.   In refusing his applications to set aside the default judgment, both H H Judge Chow and the Court of Appeal were of the view, inter alia, that Mr Wong’s said basis of the oral agreement had no real prospect of success.

7.  On the other hand, Mr Wong separately brought a claim against Mr Ho under HCA 2132/2005 on 28 October 2005, seeking damages on the basis of Mr Ho’s breach of the alleged oral agreement.  This action was struck out by Registrar Chan on 30 June 2006, whose decision was affirmed on appeal by Hon Chung J on 21 February 2007 on the basis that, under the doctrine of issue estoppel and res judicata, it was an abuse of process by Mr Wong to raise the same issue of the oral agreement again in HCA 2132/2005, when this had been previously finally adjudicated by the Courts as outlined above.  Yeung JA dismissed Mr Wong’s application for extension of time to appeal against Chung J’s decision, on the basis that Chung J’s dismissal of Mr Wong’s appeal on the doctrine of res judicata was clearly correct.

8.  On 6 November 2006, Mr Wong brought an action under DCCJ 5483/2006 against the Commissioner of IRD for damages on the basis that the Commissioner should be liable for IRD’s wrongful act in freezing his bank accounts and for IRD’s staff in trespassing his properties.  The action is pending.

9.  On 28 June 2007, Mr Wong brought an action under DCCJ 2807/2007 against Mr Ho, the IRD and the Commissioner of IRD for damages on the basis (a) Mr Ho had breached the alleged oral agreement and had allegedly misled the Court, and (b) the Commissioner is vicariously liable for Mr Ho’s alleged breach and wrongful conducts.  This action is also pending.

The present application to set aside the default judgment

10.  In light of the above background, Mr Wong’s present application to set aside the default judgment is without merit and amounts to an abuse of process.  As demonstrated above, the fundamental issue (that is, the existence of the alleged oral agreement) under the setting aside application has been previously litigated and finally decided by the courts.  Under the doctrine of res judicata, it is not open to Mr Wong to re-litigate the same issue, or any issues that he ought to have put before the court in his previous applications, all over again by way of the present application.  See: Hong Kong Civil Procedure 2008, para 18/19/11; Henderson v Henderson (1943) 3 Hare 100 at 115 per Wigram VC.

11.  In the premises, the learned Master is clearly right in dismissing Mr Wong’s application to set aside the default judgment.  There is no merit in the appeal and I dismiss the same.

The applications to amend the pleading to add a claim against Mr Ho and the Commissioner of IRD

12.  Mr Wong, after hearing the submissions of Mr Chan, Senior Government Counsel acting for the IRD, indicates to this Court that he has decided not to pursue his present two appeals against the Orders of Master Wong in dismissing his applications to amend.

13.  Mr Wong still and again confirms to the Court that he will no longer pursue these two appeals after:

(1)	I have pointed out expressly to him that the Orders of Master Wong in dismissing his applications to amend will continue to stand and be valid even if he drops his appeals now;
(2)	hearing from Mr Chan for IRD that even if he drops the appeals now, as a matter of practice the appeals would still have to be dismissed, and that the IRD would in any event still seek costs against him.

14.  In the premise, and given Mr Wong’s express confirmation that he will not pursue these two appeals, I therefore hereby formally dismiss them. Cf : Hong Kong Civil Procedure 2008, para 59/1/19.

Conclusion

15.  For the above reasons, I dismiss all of Mr Wong’s three appeals.

16.  I further make an order nisi that costs of these appeals be to the IRD to be taxed if not agreed.  This order will be made absolute 14 days from the date of this judgment unless any of the parties applies to vary it.