Aberdeen Winner Investment Co Ltd v. The Incorporated Owners of Albert House and Another
Read the full judgment text of HCA 3408/2003 on BabelCite. This High Court CFI judgment was delivered on 21 January 2004.
1. By a Summons ("the Summons") dated 13 October 2003 the Plaintiff ("Aberdeen") seeks the following:-
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HCA 3408/2003 IN THE HIGH COURT OF THE HONG KONG SPECIAL ADMINISTRATIVE REGION COURT OF FIRST INSTANCE ACTION NO. 3408 OF 2003 ____________
____________ Coram: Hon Reyes J in Chambers Date of Hearing: 8 January 2004 Date of Judgment: 21 January 2004 _______________ J U D G M E N T _______________ I. Introduction 1.By a Summons ("the Summons") dated 13 October 2003 the Plaintiff ("Aberdeen") seeks the following:-
2.By a Summons dated 1 November 2003 the Owners apply to strike out the Amended Statement of Claim as an abuse of process. 3.Although there is no Summons before me to that effect, Aberdeen also seeks default judgment against Wong under RHC Order 13 Rule 1, Wong having failed to give notice of an intention to defend these proceedings. II. Background 4.At 11 am on 1 August 1994 the concrete canopy outside that part of Albert House fronting Sai On Street in Aberdeen collapsed. Seven persons were injured. One person was killed. The 7 injured persons and the estate of the person killed (collectively, "the Action Plaintiffs") sued the Owners, Housing Management Agency Limited ("HMAL"), Ho Wing Hang ("Ho"), New Best Restaurant Limited (in liquidation) ("New Best"), Aberdeen and Wong as respectively the 1st to 8th Defendants (collectively, "the Action Defendants") in the Action. 5.The Judgment held that the Action Defendants were jointly and severally liable to each of the Action Plaintiffs. Suffiad J further stated (at 50N-51M):-
6.Following the Judgment, the damages due from the Action Defendants to the Action Plaintiffs were assessed. Final awards were adjudged on 17 September 2001. A total sum of $33,257,886.25 plus interest and costs was assessed to be payable. 7.The Action Plaintiffs mainly pursued Aberdeen for the sums awarded. In early October 2000 Aberdeen gave a total of $1,566,666.68 to the Action Plaintiffs by way of interim payment. In December 2001 the Action Plaintiffs garnisheed $940,000 of rent due from tenants of properties owned by Aberdeen. On 31 August 2002 Aberdeen's solicitors forwarded to the Action Plaintiffs' solicitors a cheque for $30,222,275.78. That amount represented the balance of the sums due under the Judgment as follows:-
Aberdeen accordingly paid a total of $32,728,942.46 to the Action Plaintiffs. 8.Aberdeen having paid more to the Action Plaintiffs than its 15% share of liability, it issued a generally indorsed Writ on 15 September 2003 seeking contribution from the Owners and Wong. A Statement of Claim was filed on 27 September 2003 and amended on 7 October 2003. 9.The Owners made an interim payment of $1,566,666.68. Later, on 10 September 2002 the Owners' solicitors sent a cheque for $3,891,964.66 to the Action Plaintiffs. That sum was calculated as follows:-
10.HMAL made an interim payment of $1,566,666.67 to the Action Plaintiffs. It has not made any other payment. On 9 July 2003 it was wound up by Order of the High Court made on Aberdeen's Petition dated 14 May 2003. 11.Ho was adjudicated bankrupt by Order dated 28 August 2002. He has not made any payment to the Action Plaintiffs. 12.New Best was wound up as insolvent, even before the trial of the Action Plaintiffs' claim, by Order of the High Court dated 30 December 1998. New Best has not made any payment to the Action Plaintiffs. 13.Wong has not made any payment to the Action Plaintiffs. Aberdeen suspects that Wong is or may soon become bankrupt. III. Discussion A. Contribution 14.Aberdeen's claim for contribution is based on the Civil Liability (Contribution) Ordinance (Cap. 377) ("CLCO"). That provides as follows:-
Except for the limited cases defined by CLCO ss. 9(3)(a) and (b), the CLCO now governs all claims for contribution, superseding any rights to contribution at common law. 15.Limitation Ordinance (Cap. 347) ("LO") s. 6 might also be noted:-
16.Mr Warren Chan SC (appearing for Aberdeen) submits that Aberdeen's claim for contribution against the Owner and Wong falls within CLCO s. 3(1). I agree. As a result of the Judgment, Aberdeen, the Owners and Wong were all persons liable in respect of the damage suffered by the Action Plaintiffs. The Action Plaintiffs opted (as they were entitled) to enforce their awards against Aberdeen, the latter having the greatest financial resources among the Action Defendants. Being jointly and severally liable with the other Action Defendants, Aberdeen had no choice but to accede to the Action Plaintiffs' demands for payment of outstanding damages. Since it paid more than that portion of the Actions Plaintiffs' damages representing its 15% share of liability, Aberdeen must now be entitled under CLCO s. 3(1) to claim reimbursement for the excess paid from the Owners, Wong and the other Action Defendants in accordance with the apportionment of liability determined by Suffiad J. 17.The difficulty arises because HMAL, New Best and Ho have become insolvent. Although none of these 3 have paid their full share of the Action Plaintiffs' damages, Aberdeen cannot recover any contribution from them to cover their proportionate share of the excess paid by Aberdeen. Does this mean that Aberdeen must shoulder the burden of the share of damages which ought to have been paid by HMAL, New Best and Ho? It would be an odd result if Aberdeen could have no recourse against the remaining Action Defendants (namely, Wong and the Owners) to bear proportionately the share of damages payable by HMAL, New Best and Ho. 18.There is no direct authority on the effect of a contributor's insolvency on other contributors. But research by Mr Chain, Mr Chan's junior counsel, has come up with the following passage in the late Professor Glanville Williams' Joint Torts and Contributory Negligence: A Study of Concurrent Fault in Great Britain, Ireland and the Common-Law Dominions (1951) (at §48 (pp. 170-2)):-
19.The thrust of Professor Williams' analysis is that solvent defendants should bear the burden of an insolvent defendant's contribution in proportion to the solvent defendants' respective shares of liability. In its paper "Law of Contract: Report on Contribution" (Law Com. No. 79) dated 9 March 1977, the English Law Commission commented as follows on Professor Williams' suggestion:-
20.The distribution of the burden of insolvent defendants among the solvent ones as proposed by Professor Williams not only makes good commonsense, but is also just and equitable in the circumstances. A division of the damages payable by insolvent defendants along the lines suggested, removes the unfairness inherent in one defendant, here Aberdeen, having to bear all or the bulk of damages for which other defendants are liable, simply because those other defendants happen to be insolvent. The insolvency of those other defendants is a fortuitous event. Without special reason, it would be wrong in principle to visit the consequences of insolvency wholly on a party who was not responsible for that occurrence. 21.I am fortified in my view by a precedent found by Aberdeen's counsel. The approach espoused by Professor Williams appears to have been used (without citation of supporting authority) by Lord Denning MR in Fisher v CHT Ltd. [1966] 2 QB 475 (CA). The Master of the Rolls stated (at 480F-481B):-
Lord Denning then concludes (at 482G-483C):-
22.If one were to apply Professor Williams' principles of contribution in the present case, the outcome would be that the entire damages awarded to the Action Plaintiffs should be borne by Aberdeen, the Owners and Wong as follows:-
Payments received by the Action Plaintiffs from HMAL, New Best or Ho (such as the interim payment of $1,566,666.67 made by HMAL) should be credited to the amounts payable by Aberdeen, the Owners and Wong respectively in the same fractions. 23.More concretely, on the facts Aberdeen should be entitled to claim amounts calculated as follows from the Owners and Won:-
24.Ms Priscilla Wong (appearing for the Owners) argues that Aberdeen cannot claim contribution because such claim is not "in respect of the same damage" as that suffered by the Action Plaintiffs. I do not accept this submission. Aberdeen is claiming to be reimbursed for part of the damages which it has paid to the Action Plaintiffs. Aberdeen and the Owners are jointly and severally liable for such damages. Aberdeen's claim for contribution is thus quintessentially "in respect of the same damage" that the Action Plaintiffs have suffered. 25.Ms Wong suggests that Aberdeen's claim is an abuse. She says that damages (including the apportionment of liability among the Action Defendants) has already been dealt with by Suffiad J in December 1999 in the Judgment. To bolster her point, she refers to various Contribution Notices filed by the Action Defendants against each other, all of which would have been before Suffiad J at the trial of the Action Plaintiffs' claim. Again I disagree. 26.There is no "res judicata" in the Action barring the present claim. The present claim only arises because, after the trial heard by Suffiad J, Aberdeen actually paid damages to the Actions Plaintiffs in an amount greater than its liability as apportioned by Suffiad J and Aberdeen cannot now recover the same from the insolvent Action Defendants. The question whether Aberdeen can shift part of the damages which it has borne onto the Owners and Wong is an issue which has only arisen since the Judgment and which could not therefore have been determined by Suffiad J. The question is accordingly not one which was so clearly part of the subject-matter of the Action and something which so clearly should have been raised then, that it would amount to an abuse of process to allow the question to be litigated in the present proceedings. 27.Ms Wong notes that the Owners have paid the Action Plaintiffs representing their 15% share of liability as apportioned by Suffiad J. While that is correct, it begs the issue whether, in light of the circumstances, the Owners have to contribute something in relation to the amounts left unpaid by the insolvent Action Defendants which Aberdeen has had to pay. Aberdeen, too, paid up its 15% share of liability,. But it also had to pay much more. That the Owners have paid up to their 15% share, does not answer the question whether Aberdeen is entitled to some relief against that "more". Contrary to the Owners' Draft Defence, I do not believe that Aberdeen is estopped from making a claim by reason only of the Action Plaintiffs' acceptance of the Owners' 15% payment. 28.Ms Wong finally submits that, even if I am against her on the question of liability, I should exercise the Court's undoubted discretion under CLCO s. 4(1) to reject Aberdeen's claim. Any contribution awarded to Aberdeen against the Owners should be "just and equitable" having regard to the extent of the Owners' responsibility for the damage in question. 29.Ms Wong suggests that Aberdeen has been slow to exercise any rights against the insolvent Action Defendants. Had it acted promptly, it may have recovered something from (say) HMAL and Ho and its claimed contribution from the Owners and Wong would then be correspondingly less. The Owners are now prejudiced by Aberdeen's delay in what they themselves can now recover from HMAL or Ho, even if the Owners by paying Aberdeen were to become subrogated to Aberdeen's rights against HMAL or Ho. 30.While I have sympathy with Ms Wong's argument, it would be wrong in principle to impose the consequences of the insolvency of some of the Action Defendants wholly on Aberdeen. This is especially the case where, as far as Suffiad J was concerned, Aberdeen and the Owners were culpable to the same degree of 15%. Further, Aberdeen's claim is just within the 2-year time limit imposed by LO s. 6(1). In light of the absence of affirmation evidence from the Owners as to the prejudice suffered by them as a result of Aberdeen's Writ being issued when it was, I do not think that it is warranted to exercise my discretion to exempt the Owners from making contribution. 31.I conclude that Aberdeen is entitled to contribution from the Owners and Wong as already calculated above. B. Default judgment against Wong 32.Aberdeen's solicitors served the Statement of Claim on Wong personally on 27 September 2003. The Amended Statement of Claim was served in similar fashion on 9 October 2003. Wong has not given notice of intention to defend. 33.RHC Order 13 Rule 1 provides:-
34.The Amended Statement of Claim claims the following relief against Wong:-
35.I agree with Mr Chan that Order 13 Rule 1(1) is applicable. Aberdeen is entitled to have judgment entered in its favour against Wong for the liquidated sum pleaded in the Amended Statement of Claim, together with interest thereon. C. Miscellaneous reliefs sought by Aberdeen 36.At the hearing before me, Ms Wong did not oppose Mr Chan's application to re-amend the Statement of Claim in the manner suggested by Summons §1. Mr Chan explained that the thinking behind the re-amendment was that, Aberdeen being itself one of the Owners, it would be unfair for the Court to require Aberdeen to contribute towards any liability which the Owners may have for the costs of Aberdeen's action in the event that Aberdeen succeeds. I gave leave for the re-amendment. But I pointed out to Mr Chan that, since the facts underlying the re-amendment were not contained in the evidence filed by Aberdeen in support of the Summons, I could not now make a summary order for the substantive relief prayed by the re-amendment. If, following this Judgment, the parties cannot agree on whether Aberdeen should or should not contribute to any costs payable by the Owners, the question will have to be brought before the Court for determination. 37.I also indicated to Mr Chan that, in the event I found in Aberdeen's favour, I was not minded to make an Order in terms of Summons §3. I doubt that the system of primary and secondary judgments suggested by Professor Williams in the passage quoted above is a practical solution to deal with the problem of the potential bankruptcy of another Action Defendant (in this case, Wong). The Court should as much as possible avoid giving "floating judgments" which crystallise on the happening of certain contingencies in the future. 38.I shall instead adopt a procedure similar to that used when dealing with string contracts in a sale of goods context. A buyer sometimes claims that, as a result of a seller's delivery of defective goods, the buyer is faced with claims from the sub-buyers to whom the buyer has on-delivered the goods. Typically, at the time of the trial, the sub-buyers' claims may not yet have been brought so that a buyer cannot establish that he has incurred an actual loss. In such situation, the Court normally declines to make a declaration that the buyer is entitled to be indemnified by the seller against future claims made by sub-buyers. That would be too much like giving the buyer a blank cheque. Instead, following Trans Trust SPRL v Danubian Trading Co. Ltd. [1952] 2 QB 297, the Court of Appeal (Cons VP, Kempster JA and Power J) in Wong Ho Wai Ying v Yeung Shui Cheung, unrep., Civil Appeal No. 128 of 1992, 24 February 1987 ([1987] HKLY 960) has held that the proper course is to reserve the question of the seller's liability (if any) to indemnify the buyer for later consideration with liberty to apply for directions. 39.By analogy with that practice, I shall adjourn the determination of Summons §3 (along with the corresponding Prayer 2A in the now Re-Amended Statement of Claim) sine die with liberty to restore. In the interim, Aberdeen can try to enforce its default judgment against Wong. If Wong should be or become bankrupt such that Aberdeen is unable to obtain satisfaction of its judgment against Wong, the matter can be restored for further consideration in light of known events as opposed to mere contingencies. Mr Chan indicated to me at the hearing that he had no objection to this course of action. 40.Given my conclusions, it is unnecessary to order the alternative relief sought in Summons §4. IV. Conclusion 41.There will judgment in Aberdeen's favour against the Owners for $9,239,437.87 and against Wong for $4,899,127.76. Interest is to run on the respective amounts at 1% over Hong Kong prime from the date of the Writ until date of judgment and thereafter at the judgment rate. 42.The determination of Summons §3 (together with Prayer 2A of the Re-Amended Statement of Claim) is to be adjourned sine die with liberty to restore. 43.The Owners' strike-out Summons is dismissed. 44.I make an Order Nisi that Aberdeen is to have the costs of its claims against the Owners and Wong respectively, such costs to include the costs of the Summons (in relation to the Owners) and Aberdeen's application for default judgment before the Master and me (in relation to Wong). The costs are to be taxed if not agreed. The determination of Prayer 6 of the Re-Amended Statement of Claim is to be adjourned sine die with liberty to restore. 45.I also make an Order Nisi that the costs of the Owners' strike-out Summons be to Aberdeen, to be taxed if not agreed. 46.I heard argument on whether there should be certificate for 2 counsel. The substantive applications before me were straightforward. Mr Chan was only engaged at the last minute. Much of the work for Aberdeen's case on the Summons had been ably discharged by Mr Chain prior to Mr Chan being briefed. Contrary to Mr Chan's submission, I do not think that a strike out application for abuse of process by itself justifies the briefing of 2 counsel, even where a party may be understandably anxious as to the outcome of the proceedings. Therefore, although I have benefitted from Mr Chan's submissions, in all the circumstances I do not think that a certificate for 2 counsel is merited here.
Representation: Mr Warren Chan SC and Mr Benjamin Chain, instructed by Messrs Wilson Yeung & Co., for the Plaintiff. Ms Priscilla Wong, instructed by Messrs Bosco Tso & Partners, for the 1st Defendant. 黃紀安經營恆安拆卸工程 (transliterated as Wong Kay On trading as Hang On Demolition and Transportation Company alternatively Hang On Transportation Company), acting in person, absent. 1 Lily Tse Lai Yin and others v The Incorporated Owners of Albert House (also known as The Owner Incorporation of Albert House) and others, unrep., HCPI828/1997, 23 December 1999 (Suffiad J). Appeal by the 1st and 2nd Defendants to Court of Appeal. Appeal dismissed. Please refer to CACV42/2004 and CACV236/2004 |
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