XCHRX ELIJAH SAATORI and Another v. CHENG CHUN MO and Another

1995, No.A3908

IN THE SUPREME COURT OF HONG KONG

HIGH COURT

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

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

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

J U D G M E N T

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

1. This is an appeal against an order by Master Jennings to set aside a default judgment entered by the Plaintiffs against the Defendants in default of defence and a further order to strike out the Statement of Claim on the ground that it was frivolous, vexatious or otherwise an abuse of the process of the Court.

Background

2. In 1989 the Plaintiffs brought an action No.A4675 of 1989 in the High Court against the Defendants for breach of contract, conversion, deceit, copyright and trademark infringement. In a hearing which lasted for some fifty-seven working days before Deputy Judge Stock (as he then was), the learned judge dismissed the Plaintiffs' claim and in his 127 page judgment he had dealt with all the causes of action. On appeal by the Plaintiffs the Court of Appeal upheld the judgment of the court below . At page 8 of the Court of Appeal judgment dated 25 November 1994 Godfrey, J.A. made the following observations :-

"He (the Defendant) received the name from Mr Saatori and he received it for the benefit of Cerebe, not for his own benefit. It was, we think, a breach of confidence for him to use it for his own benefit and, if Mr Saatori had been able to prove any loss resulting from this, Mr Cheung would have had, as it seems to us, no answer to a claim for damages from Mr Saatori on this score. But no such claim has been made and no such loss has been asserted and we say no more about the matter."

3. Based on the above passage the Plaintiffs brought the present action against the Defendants for breach of confidence and the Writ was issued on 25 April 1995. Both Defendants filed the Acknowledgment of Service on 20 May. Judgment in default of defence was entered against the Defendants on 2 November with damages to be assessed. On 29 July the Plaintiffs appeared before Master Cannon and the hearing for assessment of damages was set down for 21 November 1996 before Master Jennings.

4. On the appointed date the 1st Plaintiff appeared before the Master in person. At the conclusion of the hearing the Master made the order which is the subject mater of this appeal. Although there is no requirement that the Master should provide reasons for his decision, I am nevertheless greatly assisted by the written reasons attached to the court file. The reasons of the learned Master, in making the order, were:-

" Having applied these principles (O.18, r.19/15, 19/16, 19/20(8) and the inherent jurisdiction of the court) to the proceedings before me I was let in no doubt that they are a serious abuse of the process of this Court, and that my duty in the public interest was to make such a finding summarily.

I therefore ordered that the Judgment be set aside, the Statement of Claim be struck out and the action dismissed. I further order that there be no order as to costs of the action."

Grounds of Appeal

5. The Plaintiffs' case, on appeal, can be summarized as follows : firstly, the action based on breach in confidence was only pursued for the first time in the present action; secondly, the learned Master had wrongly dismissed his application by finding that the action was an abuse of the process of the court and that the action was obviously frivolous or vexatious; and thirdly, this is not a case which the Master should have invoked the inherent jurisdiction of the court to stay the proceedings.

6. As this is an appeal under O.58, r.1, it was dealt with by way of a rehearing.

7. Mr Saatori was invited to address the Court on the grounds of his appeal. He went through the entire history of this series of litigation from when he first invented the board game "Galaxion" in England in 1982 to the time when his appeal against the judgment of Deputy Judge Stock, Q.C., as he then was, in High Court Action No.4675 of 1992 was dismissed by the Court of Appeal in November 1994.

Res judicata

8. It is trite law that it is an abuse of the process of the Court to raise in subsequent proceedings matters which could and should have been raised and litigated in earlier actions. The leading case on this subject is the Privy Council decision in Yat Tung Investment Co. Ltd. v. Dao Heng Bank Ltd. [1975] A.C. 581 in which their Lordships affirmed the decision of the Full Court of Hong Kong to strike out a statement of claim containing a cause of action which could have been raised in an earlier action as res judicata. Lord Kilbrandon referred to the speech of Wigram V.-C. in Henderson v. Henderson (1843) 3 Hare 100 at page 590 of the Yat Tung judgment where the Vice-Chancellor said :-

"...where a given matter becomes the subject of litigation in, and of adjudication by, a court of competent jurisdiction, the court requires the party to that litigation to bring forward their whole case, and will not (except under special circumstances) permit the same parties to open the same subject of litigation in respect of matter which might have been brought forward as part of the subject in contest, but which was not brought forward, only because they have, from negligence, inadvertence, or even accident, omitted part of their case. The plea of res judicata applies, ..."

Further down the page his Lordship expressed the view that there might be "special circumstances" which requires the relaxation of this rule. He said :-

"The shutting out of a 'subject of litigation'-a power which no court should exercise but after a scrupulous examination of all the circumstances-is limited to cases where reasonable diligence would have caused a matter to be earlier raised; moreover, although negligence, inadvertence or even accident will not suffice to excuse, nevertheless 'special circumstances' are reserved in case justice should be found to require the non-application of the rule."

One of such circumstances recognized by his Lordship was that the party seeking to rely on the subject matter was not expected to have been aware of its existence. He went on to say :-

" The Vice-Chancellor's phrase 'every point which properly belonged to the subject of litigation' was expanded in Greenhalgh v. Mallard [1947] 2 All E.R. 255, 257, by Somervell L.J. :-

' ...res judicata for this purpose in not confined to the issues which the court is actually asked to decide, but... it covers issues of facts which are so clearly part of the subject matter of the litigation and so clearly could have been raised that it would be an abuse of the process of the court to allow a new proceeding to be started in respect of them.' "

9. The principle of law is clear. Mr Saatori's cause of action based on breach of confidence was available to him when he commenced the previous proceedings but it was nevertheless not included in his claim.

Are there, however, any special circumstance which justifies the relaxation of the rule? Mr Saatori was given the opportunity to be heard on this point and the explanation he offered was that as he was acting in person in the previous proceedings because of financial constraints and he did not have the benefit of legal advice. The case involved complex issues which a lay person could never have been expected to appreciate and thus argue fully before a court of law. As a result he was prejudiced in the previous proceedings as well as the present one.

10. Having heard him I am not persuaded that this is an appropriate case which the rules should be relaxed to allow him to proceed with his action. The history of this case and how the 1st Plaintiff had conducted himself in this series of actions are within the contemplation of the Yat Tung case and the present action is clearly an abuse of the process of the Court.

11. Applying the test in the Yat Tung case the present action must, in my view, be res judicata.

12. In the course of writing this judgment, I was concerned with the issue of whether the Court could, on its own motion, set aside a regular default judgment, as the learned Master did when the 1st Plaintiff went before him in the assessment hearing. I am, however, convinced that in any action which comes before it, a court has a primary duty to ensure that the parties are not to become entangled in vexatious litigation which is a clear abuse of the legal process and to the detriment of other bona fide litigants. The court must therefore have an inherent jurisdiction, at any stage of the proceedings, to set aside, strike out, stay or dismiss an action to ensure the proper administration of justice.

13. For the reasons given the appeal is dismissed.

14. I make no order as to costs.

(K.K. Pang)

Judge of the High Court