Numatic Engineering Ltd v. Peter Ying Hiu Tan

CACV000021/1980

Order 18 rule 19 - application to strike out statement of claim - action for price of goods sold and delivered - previous successful action against different defendant for price under the same contract - empty judgment - new action not frivolous or vexatious.

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Coram: Huggins, Leonard and Cons, JJ.A.

Date of Judgment: 23 October 1980

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JUDGMENT

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Huggins, J.A.:

1. This appeal raises in truth a very short point. The Appellants have brought an action against the Respondent, an individual who was trading as the Onward Trading Co. He started that business in 1977 and ceased to carry on that business on 30th June 1978. He, at that time, was forming a limited company, the Onward Machinery and Electrical Trading Co. Ltd., which was incorporated on 4th August 1978. The Respondent has applied to strike out the Statement of Claim, which claims the price of goods sold and delivered by the Appellants to the Respondent. The Registrar made an order striking out the Statement of Claim and that was upheld by the learned judge, but on different grounds: the Registrar said that the Statement of Claim disclosed no reasonable cause of action. It was agreed before the judge that that could not stand, but the judge held that the action was an abuse of the process of the court and was vexatious and frivolous. The basis for that finding was that there had been previous proceedings brought by the Appellants against the Onward Machinery and Electrical Trading Co. Ltd. and the basis of that claim was - and I use the word "basis" rather than "cause of action" - exactly the same as that against the Respondent in the present action: it was for the price of the same goods alleged to have been sold and delivered. The learned judge gave his decision in these terms:

"For my part in the context of this case to allow the appellant company to continue with the present action would be to condone an act on the part of the appellant company's solicitors which they had done against clear evidence that it was wrong to do in the circumstances, or if ever there was any error on their part, then by using the present action to correct it would be an abuse of process of the Court and is also both vexatious and frivolous."

What the judge is there saying is that the solicitor for the Appellants swore an affidavit in support of the application for summary judgment against the limited company saying that the company was indebted. The company was, in fact, not incorporated at the time, but the vast majority of the goods were sold and delivered and, indeed, it is found by the judge and is really common ground that all the goods were in fact ordered by the Respondent himself.

2. The short question therefore is whether the fact that there was an existing judgment against the limited company in respect of the price of these very goods alleged in the first action to have been sold to the limited company bars the action in any way against the Respondent for the same price. Undoubtedly it is a different cause of action, but both the Registrar and the learned judge saw a difficulty in that it could not possibly be, on the facts as put before them, that both the limited company and the Respondent were liable for the price. It may be that the limited company could be liable upon another cause of action, the company having been formed for the express purpose of taking over the rights and liabilities of the Respondent in respect of this business. There was only one case which was really the basis of the decision of the learned judge and that was Reichel v Magrath 1889 14 A.C. 665. The learned judge's attention was not drawn to several other case and, in particular, to Isaacs & Sons v Salbstein 1916 2 K.B. 139. In this latter case Swinfen Eady, L.J. said at p. 152:

"I see no ground upon which it can be maintained that an action brought in error against a fictitious person or against a person not under any liability is a bar to an action against the person alleged to be really liable. The cause of action is not the same".

There are dicta of a similar nature in the other judgments and in Bulmer Rayon Co. Ltd. v Freshwater 1933 A.C. 661. In those cases it was never suggested to the court that to bring the second action would be vexatious or frivolous.

3. It is clear that a statement of claim should not be struck out on the ground that it is frivolous or vexatious unless the case is very clear: see Gleeson v J. Wippell & Co. Ltd. 1977 1 W.L.R. 510 at 518C. In the present case it is quite clear that there was an error made by the solicitor for the Appellants in bringing the action against the limited company. The learned judge could find no excuse for that error. For my part, I must confess that I find it difficult to see how this error could have been made, for most of the papers, and certainly all the papers relating directly to the sale and purchase, showed the Respondent as the purchaser. Nevertheless, the Respondent did add to the solicitor's confusion when he filed an affidavit in reply to the Order 14 application, for he did not deny that the goods had been sold to him and he made several statements alleging that the company, the Defendant in the first action, had done things which it could not possibly have done because it was not then in existence. However, whoever is to blame for the mistake, the fact is that quite clearly on the papers it was the Respondent who was the purchaser, and that has never been denied. It would be an injustice if, by reason of the abortive action - I call it "abortive" because, although judgment was obtained, execution was fruitless - the Appellants were unable to sue the person who is obviously liable. On this ground I would say that this is not a case which was proper for the application of Order 18 rule 19 and the striking out of the Statement of Claim.

4. I would allow the appeal.

Leonard, J.A.:

5. I would likewise allow the appeal. I have nothing to add.

Cons, J.A.:

6. I, too, would allow the appeal.

7. I would only like to add this, that while I do not for one moment quarrel with the authorities which Mr. Mills-Owens has quoted, as I read them, they do not exclude the possibility that the subsequent proceedings may be an abuse of the process. It may happen that sometimes circumstances will clearly show that they are. However, in my view, the present circumstances do not go any where near that far. With greatest respect to him I think the judge was unduly influenced by the adverse view that he took of what he thought was the way in which the Plaintiffs' solicitor handled the matter.

23rd October 1980.