MAK KAM CHIU v. 富明閣業主立案法團

LDBM 204/2017

[2019] HKLdT 11

IN THE LANDS TRIBUNAL OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

BUILDING MANAGEMENT APPLICATION NO. 204 OF 2017

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D E C I S I O N

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1.  This is a decision on the preliminary question of res judicata raised by the respondent in its Notice of Opposition. The respondent asserts the matters raised by the applicant in his Notice of Application have been adjudicated by the Small Claims Tribunal and therefore seeks to strike out the applicant’s application.

BACKGROUND

2.  The applicant is the owner of car parking spaces number 13 and 14 (collectively referred to as “the Car Parking Spaces”) in Fu Ming Court, Chai Wan. The respondent is the incorporated owners of Fu Ming Court.

SMALL CLAIMS TRIBUNAL ACTION

3.  On 14 January 2015, the respondent filed an action against the applicant in the Small Claims Tribunal (“Small Claims Action”) for the outstanding management fees of car parking space number 13 (“Car Park No 13”) for the period from April 2007 to September 2014.

4.  The applicant’s defence was as follows:

1)   As early as 2007, the applicant discovered the linear markings delineating the Car Parking Spaces had been painted over. Since the Car Parking Spaces were not properly marked, the applicant was unable to use Car Park No 13.

2)   Subsequently, the respondent and the applicant agreed the payment of management fees for Car Park No 13 would be suspended pending the resolution of the delineation dispute.

3)   On or about 22 May 2014, the respondent completed the linear markings of the Car Parking Spaces. However, the applicant found the new linear markings of the Car Parking Spaces to be inconsistent with the plan annexed to the Indenture of Assignment registered in the Lands Registry by memorial number 2154914 (“the Assignment Plan”).

5.  Furthermore, the applicant lodged a counterclaim against the respondent for loss of rental income from Car Park No 13. The applicant claimed he was unable to let out the Car Park No 13 due to the respondent’s failure to resolve the delineation dispute.

6.  The adjudicator of the Small Claims Tribunal (“the Adjudicator”) gave judgment on 7 January 2016 and found, inter alia, the following:

1)   The Adjudicator had doubts as to the credibility and independence of the applicant’s expert witness Mr Law Mei Lun;[1]

2)   The Adjudicator found the Assignment Plan does not stipulate measurements of the Car Parking Spaces;[2]

3)   The Adjudicator, after considering the Assignment Plan, the First Schedule of the Deed of Mutual Covenant and the building plans, “had doubts” as to whether the applicant’s proposed measurements of the Car Parking Spaces were  correct;[3]

4)   Since the applicant was unable to provide sufficient evidence to support his contention regarding the correct dimensions of the Car Parking Spaces,  the Adjudicator did not accept the new linear markings of the Car Parking Spaces deviated from the original dimensions;[4] and

5)   The Adjudicator dismissed the applicant’s counterclaim as the applicant was unable to prove his claim on a balance of probabilities[5]:

a)   The receipts produced are not conclusive proof of rental income generated from Car Park No 13[6] .

b)   There was insufficient evidence to prove prospective tenants refused to rent the Car Park No 13 due to the lack of clear delineation.[7]

7.  The applicant applied for a review of the Adjudicator’s decision and the review was heard on 29 March 2016. The Adjudicator dismissed the review and stated in her decision, inter alia, the following:

1)   The Adjudicator had considered whether the Assignment Plan took precedence over the building plans in determining the proper measurements of the Car Parking Spaces. The applicant did not raise any new arguments[8].

2)   The Adjudicator stated it was not necessary for the tribunal to find the precise measurements of the Car Parking Spaces before it is able to determine whether the applicant had defaulted in payment of management fees. The relevant decision at paragraph 8 of the transcript dated 29 March 2016 is set out in full as follows:

“案中重要議題並非要決定車位的準確尺寸，才可決定被告應否繳付其車位的欠交管理費。正如本席在簡要理由已說出大廈車位是接照每個車位的--而每--是按照每個車位以一千分之一份劃分，而並不是以面積作考慮計算。而繳付管理費則按照該車位業權所佔的份數而定，因此，與車位面積並無關連。而本案亦無需就此議題作事實的裁定。”

8.  No appeal was lodged against the decision of the Adjudicator.

LANDS TRIBUNAL CLAIM

9.  On 23 October 2017, the applicant filed a Notice of Application in the Lands Tribunal (“the Lands Tribunal Action”) asking the tribunal to order the delineation of the Car Parking Spaces be corrected and made in accordance with the Assignment Plan. The precise wording of the relief sought in the Notice of Application is as follows: 參照13號及14號車位的契約圖則更正13 及 14 號車位界缐.

10.  The background and reasons set out in the Notice of Application are almost entirely identical to the reasons given by the applicant in the Small Claims Action.

11.  On 8 January 2018, the respondent filed a Notice of Opposition and raised the issue of res judicata.

12.  On 5 October 2018, I ordered, on my own motion, the question of res judicata be determined as a preliminary question and that the hearing of the preliminary question be fixed for 30 November 2018. Since the parties were unrepresented, I urged the parties to seek legal representation due to the legal complexities involved in such arguments. Though I noted there may be possible arguments in due course about the jurisdiction of the Lands Tribunal over the relief sought in the Notice of Application, I had not asked the parties to address the same in their submissions for the hearing of the preliminary question. I was of the view that since the respondent specifically raised the issue of res judicata, the same should be dealt with first.

13.  Both parties were legally represented at the hearing of 30 November 2018 and submissions were made on the preliminary question of res judicata.

14.  In summary, the respondent argues the doctrine of issue estoppel bars the applicant from raising the matters that have been the subject of adjudication in the Small Claims Action in the Lands Tribunal. The respondent further argues the Lands Tribunal Action constitutes a Henderson v Henderson abuse.

15.  I have considered the submissions made by counsel and shall only deal with the salient arguments raised.

IS THERE ISSUE ESTOPPEL?

16.  The doctrine of issue estoppel has been clearly and succinctly set out by Lord Diplock in the case of Thoday v Thoday [1964] P 181 at page 198 where he states:

“The second species, which I will call “issue estoppel,” is an extension of the same rule of public policy. There are many causes of action which can only be established by proving that two or more different conditions are fulfilled. Such causes of action involve as many separate issues between the parties as there are conditions to be fulfilled by the plaintiff in order to establish his cause of action; and there may be cases where the fulfilment of an identical condition is a requirement common to two or more different causes of action. If in litigation upon one such cause of action any of such separate issues as to whether a particular condition has been fulfilled is determined by a court of competent jurisdiction, either upon evidence or upon admission by a party to the litigation, neither party can, in subsequent litigation between one another upon any cause of action which depends upon the fulfilment of the identical condition, assert that the condition was fulfilled if the court has in the first litigation determined that it was not, or deny that it was fulfilled if the court in the first litigation determined that it was.

But “issue estoppel” must not be confused with “fact estoppel,” which, although a species of “estoppel in pais,” is not a species of estoppel per rem judicatam. The determination by a court of competent jurisdiction of the existence or non-existence of a fact, the existence of which is not of itself a condition the fulfilment of which is necessary to the cause of action which is being litigated before that court, but which is only relevant to proving the fulfilment of such a condition, does not estop at any rate per rem judicatam either party in subsequent litigation from asserting the existence or non-existence of the same fact contrary to the determination of the first court. It may not always be easy to draw the line between facts which give rise to “issue estoppel” and those which do not, but the distinction is important and must be borne in mind.”

17.  Though it is important to safeguard a litigant’s right to bring forward a genuine claim before the courts of law, such a right must not be exercised in a manner so as to undermine the integrity of the judicial system or to bring the administration of justice into disrepute. I have reminded myself of the gravity of any decision that may possibly deny the applicant’s right to bring a genuine subject of litigation before the court and that such a decision should not be made without scrupulous examination of all the circumstances. See Johnson v Gore Wood & Co (A Firm) [2002] 2 AC 1 at 22 and Yat Tung Investment Co Ltd v Dao Heng Bank Ltd [1975] AC 581 at 590).

18.  Having considered the evidence and submissions of counsel, I accept there is no issue estoppel in so far as the delineation of the Car Parking Spaces was raised for the purposes of defending the Small Claims Tribunal case. The Adjudicator’s finding on whether the Assignment Plan had any bearing on the proper delineation of the Car Parking Spaces was not relevant to the determination of whether management fees were outstanding and was not essential in determining whether the applicant was able to prove his defence against the respondent’s claim. However, the same cannot be said in so far as the applicant’s counterclaim in the Small Claims Tribunal Action is concerned.

19.  The applicant lodged a counterclaim in the Small Claims Tribunal Action for loss of rental income. He premised his case on the assertion that because the respondent had failed to properly delineate the Car Parking Spaces in accordance with the Assignment Plan, he was unable to let out the Car Parking Spaces and has therefore suffered loss in rental income. The question of whether the Car Parking Spaces must be delineated in accordance with the Assignment Plan is central to the applicant’s counterclaim.

20.  In dismissing the counterclaim, the Adjudicator clearly rejected, inter alia, the applicant’s assertion that the Assignment Plan provided the proper delineation requirements of the Car Parking Spaces. In rejecting the applicant’s assertion regarding the Assignment Plan, the Adjudicator considered the expert report of Mr Law dated 3 September 2015 (“the 1^st Expert Report”), the Assignment Plan itself, the deed of mutual covenant, and the applicant’s evidence. The Adjudicator also made findings on the credibility of the applicant and Mr Law’s evidence.

21.  From a reading of the Adjudicator’s reasons for decision, it is clear the issue of whether the Car Parking Spaces must be delineated in accordance with the Assignment Plan has been adjudicated by the Small Claims Tribunal, a proper court of record. As has already been settled by Seagroatt J in the case of Wong Tak-wai v Tang Kwai-wing, (unrep), HCPI 289/1996, the fact that the Small Claims Tribunal does not allow legal representation or have formal pleadings does not negate its status as a court of competent jurisdiction.

22.  The applicant’s application in the Lands Tribunal Action is premised on exactly the same arguments made in the Small Claims Tribunal Action. Since the Adjudicator has already rejected the Assignment Plan as being the proper reference for the proper delineation of the Car Parking Spaces, this issue can no longer be litigated in subsequent courts by reason of the doctrine of issue estoppel.

23.  Mr Cheung for the applicant argued at paragraph 10 of his submissions, “The defence of res judicata must fail for the Respondent cannot even get off the ground in successfully establishing the Small Claims Tribunal was a competent tribunal to try the issue of land boundaries . . .” I have considered his submissions on this argument but I am of the view his argument is misconceived.

24.  The applicant’s counterclaim is for loss of rental income caused by the respondent’s failure to reinstate the proper linear markings of Car Park No 13, which may constitute a wrongful interference with the applicant’s property. The counterclaim is clearly within the jurisdiction of the Small Claims Tribunal for being a “monetary claim founded in . . . tort where the amount claimed is not more than $75,000 . . .”: see the Schedule of Small Claims Tribunal Ordinance (Cap 338). The counterclaim is not a trial about “the issue of land boundaries” as submitted by counsel.

25.  I have also considered Mr Cheung’s submission on whether the issue of proper delineation of the Car Parking Spaces is fundamental to the Small Claims Tribunal Action and his reliance on the Adjudicator’s reasoning at paragraph 8 of the transcript dated 29 March 2016. I am of the view the Adjudicator’s comments do not mean it was superfluous for her to decide whether the Assignment Plan sets out the proper measurements of the Car Parking Spaces or that the finding was irrelevant to the issues she was required to consider in the applicant’s counterclaim. On a proper reading of the relevant passage, the Adjudicator merely stated that she was not required to decide the actual measurements of the delineation Car Parking Spaces in considering whether management fees were outstanding. In my view, it is evident from her reasoning that she was required to and did decide whether the Assignment Plan had any bearing on the question of proper delineation for the purposes of the counterclaim in the Small Claims Tribunal Action.

26.  I therefore find the issue of whether the Car Parking Spaces should be delineated in accordance with the Assignment Plan cannot be re-litigated by reason of the doctrine of issue estoppel and the Lands Tribunal Action should be struck out.

HENDERSON V HENDERSON ABUSE

27.  Even if I am wrong on finding there to be issue estoppel, I am of the view the Lands Tribunal Action should nevertheless be struck out on the basis of the Henderson v Henderson abuse for reasons set out below.

28.  The principles relating to what is commonly referred to as the Henderson v Henderson abuse are succinctly set out by Chief Justice Ma in the case of Ko Hon Yue v Chiu Pik Yuk and ors (2012) 15 HKCFAR 72 at paragraphs 82 to 85 of the judgment:

“82. The abuse that is known as the Henderson v Henderson abuse (or res judicata in the wider sense - the nomenclature is not important) is derived from the case of that name. It has been developed and explained by the House of Lords in Johnson v Gore Wood & Co [2002] 2 AC 1, by the Judicial Committee of the Privy Council in Yat Tung Investment Co Ltd v Dao Heng Bank Ltd and Brisbane City Council v A-G for Queensland [1979] AC 411, by the English Court of Appeal in Bradford and Bingley Building Society v Seddon [1999] 1 WLR 1482 and by our Court of Appeal in Ngai Few Fung v Cheung Kwai Heung [2008] 2 HKC 111 and Chiang Lily v Secretary for Justice [2009] 6 HKC 234. The essence of the doctrine is that a party ought generally not to be permitted to raise in subsequent proceedings matters which that party could and should have raised in earlier proceedings.

83. For reasons that will become evident presently, it is unnecessary in order to resolve this part of the appeal to go into the precise ambit of the principles regarding this form of abuse, although for my part, I would say that the present state of the law is reflected by the decision of the House of Lords in Johnson v Gore Wood & Co and of the Court of Appeal in Chiang Lily v Secretary for Justice. For present purposes, it is sufficient just to refer to the following facets of the doctrine:

(1) The starting point is to recognise that the doctrine is founded on an abuse of process. As Lord Wilberforce said in Brisbane City Council v A-G for Queensland, "it ought only to be applied when the facts are such as to amount to an abuse: otherwise, there is a danger of a party being shut out from bringing forward a genuine subject of litigation": (p.425).

(2) This concern (that a party ought not lightly to be deprived of the right to have serious matters litigated) was echoed by Lord Millett in Johnson v Gore Wood & Co: (p.59D-G).

(3) It must therefore be essential when striking out a claim on this basis (and thus preventing a litigation of that claim) that an abuse is found to exist in seeking to raise in subsequent proceedings claims or issues which could and should have been raised in earlier proceedings. This abuse will usually take the form of the other party being "vexed" (or in some cases, the terms "oppressed", "unjustly harassed" or "unjustly hounded" are used) by the subsequent set of proceedings: Johnson v Gore Wood & Co, 31A-B.

(4) The abuse can also take the form of the administration of justice being brought into disrepute: see Chiang Lily, 256D-G ([58]) referring to Hunter v Chief Constable of the West Midlands Police [1982] AC 529. With the procedural reforms introduced by the Civil Justice Reform in 2009, the courts in Hong Kong must now, when exercising their procedural powers, increasingly bear in mind not just the parties before them in any particular litigation but also the position of other litigants in the court process. RSC O.1A r.1(f) states as one of the underlying objectives of the court's procedural powers under the Rules to be "to ensure that the resources of the court are distributed fairly".

(5) In examining aspects such as abuse, the court is concerned with balancing interests: not just those of the litigants before it, but also taking into account the other interests involved in the administration of justice. It is important therefore here to emphasise that when the court is dealing with the Henderson v Henderson type of abuse, it is not looking at an absolute bar to litigation such as issue estoppel or cause of action estoppel. On the contrary, in considering this type of abuse, the court is required to assess a number of factors and balance competing interests. See here, Bradford and Bingley Building Society, 1490F-H. It is also worth making the following observations at this juncture: (a) There is conceptually an important distinction between absolute bars such as issue estoppel and the type of abuse with which we are concerned. In the former situation, the party who seeks to re-litigate an issue or cause of action has already had his day in court, whereas in the latter situation, that party has not: cf Johnson v Gore Wood, 59D ("It is one thing to refuse to allow a party to re-litigate a question which already has been decided; it is quite another to deny him the opportunity of litigating for the first time a question which is not previously being adjudicated upon" (Lord Millett)).

(b) The assessment of different factors and balancing competing interests can be said to be an exercise of a discretion. A number of decisions of the English Court of Appeal have cast doubt on whether the court does indeed exercise a discretion as such: see Aldi Stores Ltd v WSP Group Plc [2008] 1 WLR 748, 762C-D ([16]) and Stuart v Goldberg Linde [2008] 1 WLR 823, 845E-846C ([81]). It is unnecessary for present purposes to decide whether or not a discretion is actually being exercised. The more important point to bear in mind is that an appellate court is obliged to pay sufficient regard to the decision of the court below and should be reluctant to interfere where the decision is based on the assessment or balancing of a number of factors. Nothing in the two said cases suggests otherwise; in fact, quite the contrary.

84. The jurisdiction to prevent claims being litigated in proceedings is almost invariably exercisable by an application to strike out. It is true that an application to strike out can be made at any time: see RSC O.18 r.19(1). However, where an application is made to strike out proceedings or any part thereof on the basis that they should not be permitted to go to trial, it is obvious that such an application should be made at the earliest possible opportunity, before the parties and the court's resources are potentially wasted. Obviously, where a claim or defence is unsustainable as a matter of law, the timing of the application to strike out is less critical, but where a discretion (or something akin to it) exists as to whether or not a set of proceedings or any part thereof should be permitted to continue, time is important. In this latter situation, where proceedings may constitute an abuse on the basis that it would be vexatious for a court to try the case, the sooner this is dealt with the better; otherwise, the very evils sought to be avoided (the wastage of time and resources causing vexation or harassment of the other party) would continue to accumulate. The present case provides a glaring example of this.

85.  In the speeches of Lord Bingham of Cornhill and Lord Millett in Johnson v Gore Wood & Co, references were made to the importance of expedition in such a situation: pp.34C-D and 61C-E. A delay in raising this point of abuse gives rise to a reasonable inference either that the relevant defendant is not really vexed at all by the second set of proceedings or has acquiesced in it. It is certainly not acceptable from the point of view of the administration of justice.”

29.  Having considered the principles set out in Ko Hon Yue, I am of the view the applicant is not merely trying to re-litigate the same issue, but is seeking to launch a collateral attack on the Adjudicator’s decision by bringing the present proceedings in the Lands Tribunal.

30.  Firstly, there has not been any explanation provided by the applicant as to why he did not appeal against the Adjudicator’s decision.

31.  I note Mr Cheung for the applicant submitted a number of reasons in an attempt to explain why no appeal has been lodged against the Adjudicator’s decision. However, there has not been any evidence from the applicant confirming the same.  

32.  At no time has it been alleged by the applicant or submitted on his behalf that he was unaware of his right to appeal. On the contrary, based on the reasons submitted by counsel, it would seem the applicant made a conscious decision not to appeal against the Adjudicator’s decision.

33.  As for the reasons submitted on the applicant’s behalf, I am of the view that any misconception the applicant may have had about the merits of his appeal or any misreading of the Adjudicator’s decision cannot now be maintained since he now has the benefit of legal representation. The reasons submitted by Mr Cheung cannot be proper grounds for the applicant to bypass the appeal procedure and to have the same matters re-litigated in the Lands Tribunal instead.

34.  Secondly, the applicant’s supplemental witness statement dated 23 October 2017 (“the Lands Tribunal Statement”) and the updated report compiled by Mr Law dated 9 January 2018 (“2^nd Expert Report”), both filed with the Lands Tribunal, seem to remedy the criticisms made by the Adjudicator in the following manner:

1)   The Adjudicator commented that the measurements of length of the Car Parking Spaces provided by Mr Law in the 1^st Expert Report were inconsistent with the measurements provided in the applicant’s witness statement (dated 31 May 2015) at paragraphs 10(a) and (b).

I note that the applicant has now provided new measurements of the Car Parking Spaces at paragraphs 8(c) and (d) of the Lands Tribunal Statement. The new measurements provided in the Lands Tribunal Statement are different from the measurements provided by the applicant in his Small Claims Tribunal witness statement dated 31 May 2015 and, coincidentally, are now in line with the measurements provided by Mr Law in paragraphs 4.3 and 4.4 of the 1^st Expert Report.

2)   In her reasons for decision, the Adjudicator criticized Mr Law’s opinion that the Car Parking Spaces should be of a regular rectangular shape. The Adjudicator found the Car Parking Spaces as shown on the Assignment Plan are not of a regular rectangular shape and was of the view that Mr Law’s opinion at paragraph 5.2 of the 1^st Expert Report, where he opined “the sizes of each car park space should be a rectangle of 7’-2” wide and 15’-0” long” to be inconsistent with the Assignment Plan. Furthermore, the Adjudicator opined the Assignment Plan did not provide for exact measurements of the Car Parking Spaces.

It is apparent that in order to answer to the criticisms and/or to justify the opinion the Car Parking Spaces should be of a regular rectangular shape, and to further support his opinion on the precise measurements of the said spaces, Mr Law has now inserted a whole new section 4 entitled “Particulars of the drawing provided” in the 2^nd Expert Report. In particular, the explanations set out in paragraphs 4.2, 4.4 and 4.7 of the 2^nd Expert Report are in answer to the Adjudicator’s observation that the Car Parking Spaces on the Assignment Plan are of not a regular rectangular shape.

3)   Furthermore, the insertion of the new section 4 in the 2^nd Expert Report seems to be an attempt by Mr Law to renege on the concession made in the Small Claims Action where Mr Law conceded that the 10 feet distance as set out in the Drawing No G-2 approved by the Building Authority on 18 August 1975 (“the Building Authority Plan”) must be considered: see paragraph 23[9] of the Small Claims Tribunal transcript dated 7 January 2016. Mr Law now attempts to introduce a new argument saying that the proper distance to observe is in fact only 8.87 feet.

35.  From the above, it is evident the applicant is not merely seeking to re-litigate the issue of whether the proper delineation of the Car Parking Spaces should be in accordance with the Assignment Plan, but he seeks to re-litigate the matter by “improving” his evidence in view of the findings made by the Adjudicator. To allow the applicant to bring these proceedings in such a manner must, in my view, amount to an abuse of process, for the administration of justice will be brought into disrepute under such circumstances. The applicant, failing to bring an appeal on the Adjudicator’s decision, cannot now seek to revamp his arguments and attack her decision through the backdoor.

36.  Moreover, I am of the view that to allow the Lands Tribunal Action to continue would be unjust to the respondent because not only would the respondent be forced to meet the same issue twice but the respondent must also meet an “improved” version of the applicant’s case; the “improvement” of which is made with the benefit of the comments from the Adjudicator.

37.  Having considered all the circumstances of the case, I am of the view that even if I am wrong on the application of the doctrine of issue estoppel, the applicant’s application in the Lands Tribunal should nevertheless be struck out for being a Henderson v Henderson abuse.

38.  By reasons of the matters set out herein, I order the applicant’s application be struck out. I make a costs order nisi that the applicant do pay the respondent’s costs of the hearing on the preliminary question and of this action to be taxed on the District Court Scale if not agreed, with certificate for counsel. Unless any party applies to vary the costs order nisi within 14 days hereof, the costs order shall become an order absolute.

39.  Lastly, I thank counsel for their learned assistance.