IN THE COURT OF APPEAL v TAM MAN

CACV000034/1990

BETWEEN

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Coram: Fuad, V.-P. & Penlington, J.A.

Date of Hearing: 26 July 1990

Date of Judgment: 26 July 1990

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JUDGMENT

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Fuad, V.-P. :

1. On 7th July 1988 Osceola Limited instituted proceedings against Mr. Tam Man (HCA 4819 of 1988) claiming $3,448,221.61 from him in respect of a debit balance of a commodities account which, it later transpired, had been assigned to Osceola. The action was later transferred to the Commercial List (CL 253 of 1988). On 24th January 1989 Osceola took out an Order 14 summons which was due to be heard on 20th February. However on that day a consent summons was filed asking that judgment be entered in favour of Osceola for the full sum claimed with interest. Sears, J. made the order sought and it was drawn up on 23rd February 1989.

2. On 27th December 1989 a bankruptcy notice was filed, which was served on Mr. Tam Man personally on 10th January 1990.  On 24th January a bankruptcy petition - founded on the unpaid judgment debt - was issued.

3. On 19th February 1990 Mr. Tam Man issued a writ against Osceola (HCA 1165 of 1990) seeking to have the judgment entered against him for $3,448,221.61, with his consent, set aside together with all subsequent proceedings.  On 24th February Osceola took out a summons under Order 18, rule 19 and the inherent jurisdiction for an order that the "Statement of Claim or the indorsement of the writ" be struck out and that  all further proceedings in the action be stayed on the grounds that it was frivolous and vexatious and an abuse of the process of the Court.

4. Sears, J. on 1st March 1990 struck out Mr.Tam Man's Statement of Claim on the grounds that "it discloses no reasonable cause of action" and ordered that "all further proceedings be stayed on the grounds that the same is frivolous and vexatious and an abuse of the process of the Court".  Mr. Tam Man now appeals to this Court.  I interpolate here that a receiving order was in fact made against Mr. Tam on 12th March 1990.

5. When the writ was first issued there was a short Statement of Claim indorsed on the writ. On the day before the hearing before Sears, J., Mr. Tam Man amended the document and the Statement of Claim became"Endorsement of claim".  I set out the whole "Endorsement" with the amendments underlined.

6. In his judgment, Sears, J. explains that during the course of submissions, he thought it right to invite Mr. Pirie (then appearing for Mr. Tam Man) to particularize his claim, especially since he had said that he wanted to rely upon some fraud to ground the application to set aside the judgment.  The judge then said:

7. That version of the proposed Statement of Claim was not originally before us but during the hearing of this appeal a copy was handed up.   It is quite clear that the learned judge, when minded to strike out what had become the "Endorsement of Claim", wished to give Mr. Tam an opportunity of formulating his claim in such a way that would resist the striking out application.  What is to be noticed about the proposed Statement of Claim (which has certainly overtaken everything that was said in what was first the original Statement of Claim and which later became the "Endorsement") is that there is no mention whatever of mistake.  The learned judge adequately summarised the proposed Statement of Claim in the passage I have just read.  I will return to this draft Statement of Claim later.

8. The judge continued his judgment by saying that the principles of law were clear in so far as Order 18 rule 19 applications were concerned: the general principle was that Statements of Claim and/or writs were only struck out in unsustainable or obvious cases. He reminded himself that he must approach this matter with caution and must not shut out persons "from the judgment seat" unless it was a clear and obvious case.

9. The judge then observed that it was a general principle of law that there should be finality to litigation. The position was that when Osceola sued Mr. Tam Man, Mr. Tam could have raised matters that are now sought to be raised in the new lengtny, draft Statement of Claim and none of these matters had been raised previously. There was, in his view, no glimmer of any potential defence, other than a "stone walling defence". He had been left in no doubt that they could have been raised at the earlier time. The assignment was mentioned in Osceola's pleading, and it then became discoverable. In the normal course of events, disclosure would have shown that what was said in the pleading was factually inaccurate in that the date was shown one day too early and there was no indication that there had been an "intermediate assignment between Commodities and Finance before Osceola obtained their assignment."

10. The judge continued by saying that Mr. Pirie had argued that this was a case of common mistake, citing Huddersfield Banking Co. v. Henry Lister case [1895] 2 Ch. 273. The mistake, he had argued, was because Mr. Reade, a Director of Osceola, thought that there was just one assignment and Mr. Tam might have thought so too. The judge categorised the pleading as rather "sloppy". He said that he could see no common mistake as to the facts which went to the liability of Mr. Tam Man on his commodities trading account.

11. The judge went on to say that he could see nothing at all which indicated that there was any fraud operating to induce Mr. Tam Man to agree to the consent order. Nor could he find a common mistake of fact which induced Mr. Tam Man to enter into the -consent order. He noted that Mr. Tam Man was being advised by solicitors and, no doubt, Counsel at the time. He had freely entered into the consent order; ample opportunity had been given to the lawyers to look at everything. He could see no fraud whatsoever which was fraud as a means of defence to the original claim. The judge mentioned two authorities and said that this was a case of a man really clutching at straws who had sought to put forward something to justify the bankruptcy proceedings from not going on.

12. I now return to the draft proposed Statement of Claim. I have said already that I consider it entirely superseded what had gone before and there is no averment of mistake in it. Of course, as we know from well settled authorities, a consent judgment of the kind entered by Sears, J. can be set aside in an action brought for that purpose on any grounds that would invalidate an agreement, for example, duress, undue influence, misrepresentation, fraud or mistake. As regards fraud, as the judge himself observed there was no averment that any fraud was perpetrated by the other party upon Mr. Tam that induced him to consent to the judgment being entered against him. Whether the purported assignments were or were not effective in law cannot nullify Mr. Tam Man's consent unless he pleaded (and later proved) that if he had realised the true position he would not have consented to judgment.

13. With very great respect to the learned judge I do not agree with all that he said in his judgment. And he certainly seems to have imported into it matters about which he became aware from papers relating to other proceedings between the same parties. However, examining the matter afresh on the material that is properly before us, I have no doubt whatever that the original pleading was hopelessly defective and did not plead matters which would have justified the setting aside of the consent judgment. I have to say that I think the new draft Statement of Claim would not have improved its position. In those circumstances, I would dismiss the appeal.

Penlington, J.A.:

14. I agree that this appeal should be dismissed. I would only add that I think it quite clear that the summons to strike out under the inherent jurisdiction of the Court or under Order 18 rule 19 was, inter alia, on the grounds that the proceedings were an abuse of the process of the Court, and although the order drawn up did not, perhaps, reflect that, the judgment of Sears, J. makes it quite clear that he was exercising his jurisdiction on the basis that these proceedings were an abuse of process.

Representation:

Mr. Francis Eddis, Q.C. & Mr. J. J. E.Swaine (K.B. Chau & Co.) for Plaintiff/Appellant

Mr. Gilbert Rodway, Q.C. & Mr. Simon Westbrook (John Pickavant & Co.) for Defendant/Respondent