Numatic Engineering Ltd v. Peter Xing Hiu Tan

HCA003779/1979

Coram: Garcia, J. in Chambers

Date of Judgment: 11th February, 1980

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DECISION

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1. This is an appeal against the decision of the Registrar made on the 5th day of December, 1979, whereby he ordered the appellant company's claim to be struck out under Order 18 rule 19 of the Rules of the Supreme Court on the ground that it discloses no reasonable cause of action.

2. The appellant company is a manufacturer of vacuum cleaners in the United Kingdom and one of its customers in Hong Kong is the Onward Trading Co. of which the respondent is the sole proprietor. The latter firm carries on business at 1701A Cameron Commercial Centre, 458-468 Hennessy Road, Hong Kong. From certain invoices exhibited to an affidavit filed by the respondent on 28th September, 1979 in these proceedings, the firm had been dealing with the appellant company since 8th December, 1977, and up to the 18th December, 1978, the said firm was indebted to the appellant company in the sum of &7,082.73, being the balance of the price of goods sold and delivered. The firm had only commenced business, according to the Business Registration form filed with the relevant Department, on the 1st day of July, 1977.

3. On the 4th day of August, 1978, the Onward Machinery and Electrical Trading Ltd. was incorporated in Hong Kong, under the Companies Ordinance, Cap. 32, and its registered office was situated at 1701A Cameron Commercial Centre, 458-468 Hennessy Road, the same address as the firm, and the respondent was the majority shareholder and its Director and General Manager.

4. The appellant company continued to deal with the firm as shown in the documents exhibited even after the date of the incorporation of the said company. However, on the 10th day of March, 1979, the sum of &7,082.73 remained unpaid and a letter was addressed to the company by the solicitors of the appellant company, Messrs. Charles Russell & Co. demanding payment of the said sum from the company, failing which, proceedings would be commenced three days from that date for the recovery of the outstanding sum. On the 15th March, 1979 in response to that letter, the respondent's solicitors wrote as follows:-

5. The response to this letter from the appellant company's solicitors appeared to be rather surprising since it must be assumed that before making the demand for payment of the said sum, they would have at least armed themselves with the necessary documents pertaining to the debt. In fact the contents of that reply which is dated 20th March, 1979 indicate that the said solicitors wore in possession of the relevant documents. The letter reads:-

6. Although they knew the company's registered office to be at the Cameron Commercial Centre at which office they eventually served the writ, nevertheless a copy of the said writ was also sent to the company at the Tung Sun Commercial Centre at 194-200 Lockhart Road. The conclusions which I draw from the abovementioned reply are (1) the appellant company's solicitors were intent upon pursuing their clients' claim only against the company; and (2) they had knowledge of the relationship between the respondent and the company.

7. Despite the letter of 15th March, 1979, which I think was in unequivocal terms so far as the dealings between the appellant company and the respondent were concerned, the appellant company's solicitors plunged ahead and issued a writ against the company on the 29th March, 1979 serving it at the company's registered office as noted earlier. The Statement of Claim in the writ (High Court Action No. 1287/79) particularised the various invoice numbers pertaining to the goods of the appellant company consigned to the recipient, together with the relevant amounts and the various sums paid on account, leaving the balance of &7,082.73 unpaid and claimed in the writ. All the invoice numbers shown in the particulars of the Statement of Claim with the exception of E0251 for &600.06, a copy of which is not in the file of proceedings, relate to invoices which had been issued by the appellant company to the Onward Trading Co. With the appearance of the said information in the particulars of the Statement of Claim, it would not be unreasonable to assume that when the appellant company's solicitors when writing the letter of 20th March, 1979 were referring to those invoices as "all the documents in our possession", unless of course they were then unavailable to them at that time.

8. An appearance was entered by Messrs. K.M. Lai & Li on behalf of the company and on 7th April, 1979, the appellant company's solicitors wrote to the former expressing surprise that they were also acting for the company instead of what was expressed in the reply of 15th March, 1979, and informed them that the appellant company was expressed in the reply of 15th March, 1979, and informed them that the appellant company was applying to Court under Order 14 for summary judgment since they could not see any possible grounds of defence by the company to the said action. A summons was accordingly taken out on 17th April, 1979 and in the supporting affidavit sworn to by Mr. D.H. Glynn, a solicitor instructed by the appellant company, the following statement appears:-

"2. The defendants (Onward Machinery and Electrical Trading Ltd.) are, and were at the commencement of this action, justly and truly indebted to the above-named plaintiffs in the sum of &7,082.73 for the balance of the price of goods sold and delivered. The particulars of the said claim appear by the Statement of Claim in this action."

9. In answer to the summons, Mr. Peter Ying filed an affidavit and inter alia stated that he was the Director and General Manager of the company. Instead of an outright denial of the claim on the ground that the company had no dealings whatsoever with the appellants, as indicated in the letter of 15th March, 1979 to the appellant company's solicitors, the said affidavit makes reference to the goods which had been sent to the company. Although it had been stated in the above letter that the course of dealings was between the appellant company and the respondent, paragraphs 16 and 17 of the affidavit state:-

10. The circumstances mentioned were in relation to damaged parts of the goods shipped by the appellant company and their replacement but there was absolutely no mention of the fact that the company had no dealings whatsoever with the appellant company. To Mr. Peter Ying's affidavit were exhibited letters and invoices addressed to and by the Onward Trading Company, of which he was the Manager. Despite this affidavit which was filed on 30th April, 1979 the appellant company's solicitors went ahead on 25th May, 1979 with the Summons and after a hearing before the Registrar at which both parties were represented by counsel, an order was made that judgment be entered for the appellant company in the sum of &4,766 being part of the claim of &7,082.73, the company being given leave to defend the action so far as the balance of &2,316.73 was concerned. On 30th June, 1979 the appellant company was given judgment for the said balance as no defence was filed by the company. The judgments for both sums proved to be empty ones because according to a letter written by the appellant company's solicitors on 24th August, 1979 to the company's solicitors they state:-

"Our attempts to execute the judgment are fruitless. In the circumstances we have prepared proceedings against Mr. Peter Ying Personally. We note that on 15th March, 1979, in a letter to us, you stated that you act for him."

11. On 31st August, 1979, the appellant company issued a writ in High Court Action No. 3779/79 - the present action - claiming the sum of &7,082.73 from the respondent. The Statement of Claim set out in the writ is in exactly the same terms as those in High Court Action No. 1287/79, that is, the invoices, the amounts thereof and payments made therefor, are identical. In fact the particulars of the Statement of Claim are a replica of those in the previous action for which judgment had already been obtained by the appellant company. An appearance was entered to the present action by the respondent on 8th September, 1979, and on 25th September a summons was issued by the respondent for the Statement of Claim to be struck out under Order 18, rule 19 of the Rules of the Supreme Court, and under the inherent jurisdiction of the Court on the ground that the Statement of Claim discloses no reasonable cause of action against the defendant, that the Statement of Claim was frivolous and vexatious and that it was an abuse of the process of the Court. On 15th December, 1979, Mr. Registrar Cruden made the order as prayed in the summons but on 19th January, 1980, at the behest of the appellant company's solicitors, a summons was issued by the respondent for an order under the slip rule that the said Order be amended by the deletion of the words "and under the inherent jurisdiction of the Court" and "and that it is frivolous and vexatious and an abuse of the process of the Court", so that the Order now appealed against is the amended order.

12. It has been submitted that this is irrelevant since an appeal from the Registrar's order is by way of re-hearing, with which view I agree. It is common ground that the Registrar would be wrong in making the order only on the basis that the Statement of Claim disclosed no cause of action, because under Order 18 rule 19(2), no evidence is admissible on an application made under rule 19(1)(a) of that order (Wenlock v. Moloney & Others (1965) 1 W.L.R. 1238). Mr. Ching however relies on the other two grounds, that is, that the Statement of Claim is frivolous and vexatious, and that is an abuse of the process of the Court, in support of his contention that this appeal ought to be dismissed and the Statement of Claim struck out.

13. In support of the summons under Order 18 rule 19 the respondent filed an affidavit on 28th September, 1979. Among the statements made there in is the following:-

"15. I have been advised by my legal advisers and verily believe that the plaintiffs having elected to sue the company and proceeded to final judgment, they cannot afterwards sue me in respect of the same claim. In the circumstances, I respectfully ask this Honourable Court to grant me the relief prayed for in the summons."

14. Mr. Litton submits that this paragraph of the affidavit indicates a misunderstanding of the true nature of the doctrine of election, whether at common law or in equity, and that it is of limited application as explained in the judgment of Lord Wright in Lissenden v. C.A.V. Bosh, Ltd. (1939) H.L. (E) 412, at page 435.

"Indeed the formula (approbation and reprobation) in its more precise and technical significance has become an equitable derived from Scots Law of the equitable doctrine of election. The formula is also sometimes used to indicate the position where a person takes benefits under a deed and is held bound because of his conduct in so doing by conditions expressed in the deed, though he has notexecuted it. In such and similar cases the formula becomes, as it were, a label, and lawyers know when and where to apply it. A more doubtful but still not infrequent use of the formula is in cases of common law election where there is a choice between alternative and inconsistent remedies, for instance, between charging a defendant in tort and charging him for money had and received or between charging the principal or the agent. In these latter cases the alternatives are mutually exclusive."

15. Mr. Litton also makes reference to the judgment of Lord Atkin in the same case at page 429:-

"But I also share the difficulty which I think all your Lordships feel as to the application of what has been called the doctrine of approbation and reprobation. The noble Lord on the Woolsack has to my mind clearly shown the limitations of that doctrine as defined in the law of Scotland from which it comes. In this country I do not think it expresses any formal legal concept: I regard it as a descriptive phrase equivalent to 'blowing hot and cold.' I find great difficulty in placing such phrases in any legal category though they may be applied correctly in defining what is meant by election whether at common law or in equity. In cases where the doctrine does apply the person concerned has the choice of two rights, either of which he is at liberty to adopt, but not both. Where the doctrine does apply, if the person to whom the choice belongs irrevocably and with knowledge adopts the one he cannot afterwards assert the other. Election between the liability of principal and agent is perhaps the most usual instance in common law. The doctrine of election could have no place in the present case. The applicant is not faced with alternative rights, it is the same right that he claims but in larger degree. In Mills v. Duckworth, a plaintiff who had been awarded damages for negligence had taken the judgment sum out of a larger sum paid into Court and then had appealed against the quantum of damages and was met by a similar objection to his appeal. Lord Fairfield in overruling the objection pointedly said:

In that case, the appellant Lissenden obtained an award under the Workmen's Compensation Act 1925 against the respondent company for partial incapacity and was paid a lump sum for a certain period. He appealed against the award on the ground that he was entitled to be paid a weekly sum so long as he was incapacitated. It was taken as a preliminary objection at the hearing of the appeal that as he had accepted the compensation and the costs awarded he had approbated the award and barred from going further. This objection was upheld by the Court of Appeal but on appeal to the House of Lords it was held that his acceptance of the compensation awarded did not preclude him from appealing on the ground that the compensation should have been of a larger sum than that awarded. Reliance is placed upon the judgments quoted in this case that the doctrine of election is of limited application, that is, that such a doctrine would not avail the respondent in the present proceedings since the appellant company did not have to elect between which of the parties he seeks his rights as the company and the respondent are neither joint contractors, partners nor principal and agent as far as the course of dealings between the company and the respondent and the appellant company is concerned. (See also In re Hodgson, Beckett, v. Ramsdale (1885) 31 Ch. D. 177).

16. Mr. Litton further submits that if neither election at common law or equity was meant in that paragraph and that the basis upon which the Statement of Claim was struck out was a plea of former recovery, then the following constituents of a good plea of former recovery have not been satisfied:-

The Statement of Claim in High Court Action No. 1278/79 and the present action as noted above are identical in terms and in my view, these two actions are based on exactly the same cause, that is, the recovery of the balance of money due and owing on goods sold and delivered by the appellant company. Mr. Litton is however on firmer ground in respect of the sixth constituent, that is that the company and the respondent are not jointly liable to the appellant company for the debt, nor did the company, despite what has been averred in paragraph 3 of Mr. Peter Ying's affidavit, absorb all the liabilities of the respondent vis a vis the appellant company, nor was there on the evidence, an alternative liability as between the company and the respondent. However, in an affidavit filed by Mr. R.T. Gallie, a solicitor instructed by the appellant company, the following assertion is made in para. 7(a):-

"the conduct of the defendant himself contributed greatly to the confusion in the minds of the plaintiff company and its advisers as to whom to sue."

and in particular, he refers to a telex sent by the defendant (Peter Ying) to the appellant company on 14th December, 1978 wherein the defendant (Peter Ying) promised personally to settle part of the amount claimed (&4,761.93) before 12th January, 1979. With respect, the documents in the hands of the solicitors for the appellant company on 10th March, 1979 and the copy of the said telex message made it quite clear that the course of the dealings was between the appellant company and Onward Trading Co. and no external reference was made to the Onward Machinery and Electrical Ltd. Where was the confusion? If indeed there was any confusion caused by the conduct of Mr. Peter Ying as complained, there was no reason why he should not have been joined as a defendant under Order 15, rule 4 of the Rules of the Supreme Court. An entirely different assertion is now made in paragraph 9 of the abovementioned affidavit:-

"9. The defendant and the defendant alone is indebted to the plaintiff company as he has admitted but he now seeks to evade his obligation by invoking the highly technical but in this action inapplicable doctrine of election."

The appellant company and their solicitors could therefore have not been mistaken when they issued their writ against the company about the party they wished to sue for the recovery of the debt due to them. All the signs unmistakenly pointed to the respondent as being the person who had dealings with the appellant company, but why did they sue the company? Like Mr. Ching, I have not been able to gather from any of the evidence or from the submissions made on behalf of the appellant company any explanation for that action. A possible explanation is that the solicitors for the appellant company made no distinction whatsoever between the company and the respondent since he was the majority shareholder (and this could have been easily ascertained by making the necessary search at the Companies Registry) and a Director and General Manager of the Company, or that the Company had taken over all the assets and liabilities of the respondent upon incorporation as stated in Mr. Peter Ying's affidavit filed on 28th September, 1979. Could it not be said that in these circumstances, the respondent was privy to the company which had been sued to judgment? I think so, but Mr. Ching relies on the case of Reichel v. Macgrath (1869) 14 A.C. H.L. (E) to support his argument that the Statement of Claim filed in this action was vexatious and frivolous and an abuse of the process of the Court. In that case, the Rev. Reichel was the Vicar of Sparsholt cum Kingston Lisle but he resigned the benefice. He apparently changed his mind and brought an action claiming a declaration that it was void and sought an injunction to restrain the Bishop and patrons of the benefice from presenting any other person to the benefice. He failed in his action and the respondent Rev. Macgrath was appointed to the benefice. The latter brought an action claiming a declaration that he was the vicar and asked for a perpetual injunction to restrain the Rev. Reichel from depriving him of the use and occupation of the house and lands. In his Statement of Defence the Rev. Reichel set up the same case as that on which he had been defeated in the action in which he was the plaintiff. The judgment of the Lord Halsbury, L.C. is set out in full:-

"My Lords, I think it would be a scandal to the administration of justice if, the same question having been disposed of by one case, the litigant were to be permitted by changing the form of the proceedings to set up the same case again. It cannot be denied that the only ground upon which Mr. Reichel can resist the claim by Mr. Macgrath to occupy the vicarage is that he (Mr. Reichel) is still vicar of Sparsholt. If by the hypothesis he is not vicar of Sparsholt and his appeal absolutely fails it surely must be in the jurisdiction of the Court of Justice to prevent the defeated litigant raising the very same question which the Court has decided in a separate action. I believe there must be an inherent jurisdiction in every Court of Justice to prevent such an abuse of its procedure and I think therefore that this Appeal must likewise be dismissed."

17. Mr. Litton contends further that the appellant company would be driven from the seat of judgment if its Statement of Claim cannot go further because the respondent has no reasonable defence to the action and that the judgment obtained against the company had not been adjudicated upon, it being a default judgment. If I may make an observation here I think the driving from the seat of judgment was the appellant company's own doing. I think it is relevant to quote here part of the dissenting judgment of Huggins, J. as he then was in the case of Au Yeung Siu Tung v. Tung Shing Ho (a firm) 1974 H.K.L.R. 157 at page 179:-

"The report of Ker v. Williams says that-

That was an appeal from the Chancery Division heard in August 1885 and it was held that a dismissal for want of prosecution under the equivalent of 0.35 r. 1 did constitute a final judgment which raised an estoppel. Mr. Jackson-Lipkin has been compelled to submit that we should either regard that case as having been overruled or say that the report is so unsatisfactory that it ought not be treated as an authority. I readily agree that the reports in the Solicitors' Journal must be treated with care in view of the fact that they do not purport to give the ipsissima verba of the judges but no complaint appears to have been made by the judges to whom this report has been cited on other occasions and I see no reason to doubt it nor have I been persuaded that the claim has been overruled. I find some comfort in the fact that we still find it cited in the Supreme Court Practice and by textbooks writers of repute. The case seems to me to be on all fours with the present and to be decisive. If judgment has been given dismissing an action for want of prosecution I think that common sense requires that the plaintiff shall not be allowed to annoy the defendant with subsequent actions based upon identical facts; nemo debet bis vexari pro una et eadem causa. For my part I cannot see that it makes any difference whether the first action was dismissed because the Statement of Claim disclosed no cause of action because the plaintiff chose to adduce no evidence, because his action was statute barred, because the Court found against him upon some issue of law or fact or because he failed to prove any material fact, he not having appeared to prosecute his cause at all. In the present case it may not have been decided that no cause of action exists "after a full enquiry", but it has been so determined after such an enquiry as the plaintiff has enabled the Court to make. It seems to me that under the adversary system that distinction is immaterial."

18. In the present action the appellant company has already obtained a judgment which up to now has not been set aside and in my view the principles discussed in that judgment apply with greater force to the present action.

19. 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. This appeal is accordingly dismissed with costs and the Statement of Claim is struck out.

Representation:

Mr. Henry Litton, Q.C. & Mr. Allman-Brown (Charles Russell & Co.,) for Appellant/Plaintiff

Mr. Charles Ching, Q.C. and Mr. Winston Poon (K.M. Lai & Li) for Respondent/Defendant