GRANT THORNTON INTERNATIONAL LTD AND OTHERS v. TANG CHUNG WAH AND ANOTHER

CACV 193/2013

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF APPEAL

CIVIL APPEAL NO 193 OF 2013

(ON APPEAL FROM HCCL NO 17 OF 2012)

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R E A S O N S   F O R   J U D G M E N T

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Hon Poon J (giving the reasons for judgment of the Court) :

A. INTRODUCTION

1.  The 1^st plaintiff is an international firm of accountants.  The 2^nd to 9^th plaintiffs are partners of the firm.  The defendants are former partners of the firm.  Apart from the proceedings here, the parties are also embroiled in arbitration proceedings in London, England.  On 14 November 2012, Hildyard J of the Chancery Division of the High Court of England & Wales ordered the defendants to pay the plaintiffs’ costs of £57,500.00 together with interest (“Costs Order”).

2.  By a summons dated 10 June 2013, the plaintiffs sought summary judgment against the defendants to enforce the Costs Order, which was allowed by Ng J on 23 July 2013.  Ng J further ordered that the plaintiffs’ application for striking out the defendants’ counterclaim be adjourned to be heard together with the defendants’ striking out application on 29 August 2013.[1] The defendants then appealed against Ng J’s order.  On 29 May 2014, after hearing Mr Cheung, the defendants’ counsel, we dismissed the appeal.  We now hand down the reasons for our judgment.

B. DISCUSSION

B1. Mr Cheung’s submissions

3.  Mr Cheung’s submissions boiled down to two main points.

4.  First, there were triable issues as to (a) whether the 2^nd to 9^th plaintiffs were entitled to be awarded costs in the English proceedings (“the Entitlement Issue”); and (b) whether Messrs King & Wood Mallesons have the authority to act for the 2^nd to 9^th plaintiffs in the proceedings below (“the Authority Issue”).  So Ng J erred in entering summary judgment based on the Costs Order against the defendants.

5.  Second, the Authority Issue ought to be resolved first.  So Ng J erred in ordering the two striking out applications to be heard together without first determining it.

B2. Entitlement Issue

6.  In our view, the Entitlement issue is a point which could and should have been raised before Hildyard J.  The doctrine of res judicata in the wider sense as explained in Yat Tung Investment Co Ltd v Dao Heng Bank Ltd [1975] AC 581 applies to prohibit the defendants from raising it again before us.

7.  Mr Cheung relied on a draft “Litigation Co-operation Agreement”, which on the defendant’s case, was only made available to them by a Mr Chow Tak Ping Paul, a party to the English proceedings, until after the Costs Order was made.  A copy of the draft Agreement was exhibited to Mr Chow’s affirmation dated 19 July 2013.  Mr Chow said the 2^nd plaintiff emailed to him the draft Agreement sometime in April 2012. According to Clause 1.3 of the draft Agreement, the 1^st plaintiff shall be responsible for the costs of the English proceedings on behalf of all the plaintiffs.  Mr Cheung argued that Clause 1.3 clearly demonstrated that the 2^nd to 9^th plaintiff owed no costs liability to the solicitors acting for them in the English proceedings.  Thus they should not be indemnified by the defendants on costs.  Since this piece of information was not available to the defendants at the time of the Costs Order, it would be unfair if the defendants could not raise the Entitlement Issue in opposing the application for summary judgment.

8.  We accept that very exceptionally, special circumstances might exist to enable a party to overcome the hurdle of res judicata to raise a point which has been previously decided against him. However, we are not persuaded by Mr Cheung that such special circumstances arose here because of the draft Agreement.  The draft Agreement is a draft. Absent any evidence that the parties to it had actually executed it, it is not evidence capable of supporting the defendants’ case on the Entitlement Issue. Further, the defendants have failed to explain why the draft Agreement could not by reasonable diligence have been adduced before Hildyard J.  We reject Mr Cheung’s submissions.

9.  We next turn to the Authority Issue.

B3. Authority Issue

10.  By a decision dated 5 June 2013, Ng J made various interlocutory orders.  The defendants appealed against those orders. This Court, differently constituted, dismissed the defendant’s appeal on 4 July 2013 in HCMP 1510/2013, with reasons for judgment handed down on 11 July 2013.  One of the points that the defendants raised before Ng J and this Court in that case was the Authority Issue.  Both Ng J and this Court found against the defendants on it.  In light of these previous concurrent findings against the defendants, the doctrine of res judicata in its conventional sense applies to the Authority Issue with full force.

11.  Mr Cheung contended that Ng J and this Court (in HCMP 1510/2013) had misapplied the law in determining the Authority Issue.  The defendants should therefore be allowed to re-open it now.  With the greatest respect, this submission is wholly unmeritorious and is firmly rejected.

B4. Summary judgment

12.  No triable issue possibly arose because of the Entitlement Issue and the Authority Issue.  Ng J was correct in entering summary judgment against the defendants based on the Costs Order.

B5. Case management decision

13.  Ng J’s order pertaining to the striking out applications is a case management decision.  He was clearly right to make such a decision when the defendants were not entitled to re-open the Authority Issue.  We can see no basis to disturb it.

C. CONCLUSION

14.  For the above reasons, we dismissed the defendants’ appeal with costs.