Union (V-tex) Shirt Factory Ltd v. Union V-tex Realty Ltd and Others

HCA012520A/1983

1983 No. 12520

IN THE SUPREME COURT OF HONG KONG

HIGH COURT

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BETWEEN

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Coram: Hon. Clough, J.

Dates of hearing: 8, 10, 11 & 12 October 1984

Date of delivery of judgment: 23 November 1984

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JUDGMENT

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1. These are my reserved reasons for the order made by me on the 12th October 1984 striking out the Plaintiff's Writ and Statement of Claim and dismissing this action on the application of all the Defendants under Order 18 rule 19 and the inherent jurisdiction of the court as being an abuse of the process of the court. At the conclusion of the hearing I was firmly of the view that the claim should be struck out and the action dismissed but, having had the assistance of three leading counsel whose submissions took up four days, I considered that I should reserve my reasons for my decision and deliver them in writing.

2. The action is an unusual one and it is necessary to give an outline of the relevant background.

3. The writ was issued on the 11th October 1983 and seeks against the Defendants virtually the same relief as that previously sought by the Plaintiff in two previous consolidated actions (Nos. 219 and 602 of 1976) ("the first actions") by the Plaintiff against the present Defendants and two other parties.

4. The first action against the present 1st Defendant ("Realty") was begun by the Plaintiff on the 30th January 1976. The first action against the individual Defendants in this action and two other parties was begun on the 26th March 1976. The first actions were dismissed for want of presecution by the Court of Appeal on the 30th June 1983 in circumstances outlined below.

5. The Plaintiff has been in compulsory liquidation since the making of a winding up order against it on the 18th April 1975 when the Official Receiver was appointed liquidator. He has at all material times had the conduct of the first actions and of this action.

6. At the heart of both actions lies the contention, made in paragraph 4 of the Amended Consolidated Statement of Claim in the first actions and in paragraph 4 of the Statement of Claim in this action, that the present individual Defendants and two defendants in one of the first actions combined or conspired to defraud and injure the Plaintiff and its creditors. The conspiracy or combination is alleged to have entailed the dishonest transfer on the 2nd February 1973 of the major assets of the Plaintiff ("the Hennessy Road Property" and "the Kwun Tong Property") without consideration and on onerous terms (involving a lease back to the Plaintiff at an excessive rent) to Realty which was incorporated on the date of the transfer. The purpose of the conspiracy is alleged to have been to procure the use of the transferred properties for the personal benefit of the conspirators.

7. The scheme is alleged inter alia to have enabled the individual Defendants (who are no longer directors of Realty) to create for themselves a capital reserve of $4,040,000 which is alleged to have been wrongfully applied in full payment of 4,040,000 $1 shares issued as fully paid up to themselves.

8. The disposal of the Hennessy Road and Kwun Tong Properties by Realty was initially prevented by an injunction obtained from McMullin J. in the first action against Realty on the 30th January 1976 but on the 31st March 1976 Li J. varied the order of McMullin J. to permit the sale of the Kwun Tong Property. The latter Property is now represented by a fund of upwards of $3.4 million ("the Kwun Tong Property fund") held in a joint account in the names of the respective solicitors of the Plaintiff and Realty. The present position is that the disposal of the Hennessy Road Property and the Kwun Tong Propoerty fund is prevented by an interlocutory injunction granted by me in this action on the 24th January 1984.

9. The relief sought by the Plaintiff against Realty in both actions includes a declaration that it holds the Hennessy Road Property and the Kwun Tong Property fund as trustee for the Plaintiff and consequential relief. The relief sought by the Plaintiff against the individual. Defendants in both actions includes declarations that they are liable to account to the Plaintiff as constructive trustees for the value of the above mentioned assets and that they hold their allotted shares in Realty and the dividends on such shares as constructive trustees for the Plaintiff, and consequential relief.

10. The salient relevant events which culminated in the final determination of the first actions on the 2nd February 1984 are as follows.

11. Between the 20th January and the 12th March 1983 all the present individual Defendants applied to the court to have the first actions dismissed for want of prosecution. By then the actions had reached an advanced stage and by the 28th February 1983 a date for the hearing was fixed for some time in October 1983.

12. The Defendants' applications were heard by Mantell J. in an eight-day hearing which concluded on the 31st March 1983 when he delivered a judgment dismissing the applications. During the hearing leading counsel for the Plaintiff (who does not now represent the Plaintiff) conceded that by the date of the application the Plaintiff's cause of action had become barred by the Limitation Ordinance (Cap. 347).

13. There was argument as to when the limitation period began and ended. The impeached transactions having taken place on the 2nd February 1973, counsel for the Defendants contended that the Plaintiff had immediate knowledge of the transactions so that the limitation period would have expired in February 1979. Leading counsel for the Plaintiff, who invoked section 26 of the Limitation Ordinance, contended that it was the liquidator's knowledge that was material. He was not appointed until the 15th April 1975 and on behalf of the Plaintiff it was evidently argued that the limitation period did not expire until January 1982.

14. Those representing the parties were all clearly basing their arguments on the footing that the relevant limitation period was six years and that it had expired at some time prior to the hearing of the application. Mantell J. certainly seems to have dealt with the limitation question on that basis because he made only a passing reference to the limitation period when he was about to deal with the question of prejudice. He observed: -

"So I come to the question of prejudice. I think it is conceded now that the limitation period in this action would have come to an end some time in the period April 1981 to January 1982 ..."

15. Mantell J. having found that the Plaintiff had been guilty of inordinate and inexcusable delay but not being satisfied that the Defendants had been sufficiently prejudiced to justify dismissing the actions, dismissed the application. From this decision the Defendants appealed to the Court of Appeal on the ground that Mantell J. should have found in their favour on the issue of prejudice. The Plaintiff lodged cross-notices against Realty and against the 5th and 6th Defendants in the first actions (who are the 4th and 5th Defendants in the present action) seeking to support Mantell J.'s decision on the footing that in the case of the Defendants named in the cross-notices Mantell J. should not, for reasons stated in the cross-notices, have found inordinate and inexcusable delay established against the Plaintiff. There is no reference to the question of limitation in the Defendants' notices of appeal or in the Plaintiff's cross-notices.

16. On the 30th June 1983 the Court of Appeal allowed the Defendants' appeals and dismissed the first actions after upholding Mantell J. on the issue of inordinate and inexcusable delay and reversing his decision on the issue of prejudice.

17. The judgments of Sir Alan Huggins, V.P. and Fuad J.A. (with both of whom Yang J.A. concurred) dealt with the questions raised in the appeal relating to inordinate and inexcusable delay and to prejudice. The only reference to the question of limitation occurs in the chronological table in the judgment of Sir Alan Huggins V.P. where he sets out the important events in the first action and includes the following: -

18. It seems certain, and I apprehend that this is now common ground between the parties, that the appeal proceeded on the footing that the Plaintiff conceded that there was a six year limitation period in respect of its causes of action and that that peried had expired by January 1982 at the latest.

19. After the Defendants' appeal had succeeded the Plaintiff applied to the Court of Appeal by notice of motion dated the 12th July 1983 for leave to appeal to the Judicial Committee of the Privy Council against its order made on the 30th June 1983 allowing the Defendants' appeal and dismissing the first actions. Leading counsel was instructed to advise on the merits of the appeal. He advised the Plaintiff's solicitors inter alia that section 20 of the Limitation Ordinance (Cap. 347) applied to the actions and that this was a sufficient reason to make it wrong for the first actions to have been struck out.

20. This advice prompted the Plaintiff to apply to the Court of Appeal by a notice of motion dated the 30th September 1983 for the re-hearing of the appeal and for leave to rely, on the re-hearing, upon a respondent's notice seeking to uphold the order of Mantell J. made on the 31st March 1983, not only on the grounds on which it was made, but also on the additional ground that in so far as Mantell J. held that the limitation period in the first actions had expired he had erred in failing to take section 20 into account. At the same time the Plaintiff sought an order that the order of the Court of Appeal made on the 30th June 1983 allowing the appeal from the decision of Mantell J. should not be perfected.

21. In support of the application to re-open the appeal the Plaintiff's solicitor made an affidavit in which he deposed inter alia that leading counsel who had raised the question of the application of section 20 of the Limitation Ordinance had not been involved in either the proceedings before the Court of Appeal or the proceedings before Mantell J.. With commendable candour the deponent went on to say as follows:-

"Unfortunately, in those proceedings, no point was taken on behalf of the Plaintiff that there was no applicable limitation period to this action. This point was overlooked by me and I verily believe was also overlooked by counsel instructed on behalf of the Plaintiff."

22. On the 11th October 1983 the Court of Appeal dismissed the Plaintiff's application for the re-hearing of the appeal and it also refused the Plaintiff's application for leave to appeal to the Judicial Committee of the Privy Council from the substantive decision of the Court of Appeal on the 30th June 1983. The reason for dismissing the application to re-hear the appeal was in substance that the order made by the court on the 30th June 1983, although not in the fullest sense perfect, had been perfected by the 27th September 1983 and so the court h ad no jurisdiction to re-open the appeal: Union V-Tex Shirt Factory Ltd. v Union V-Tex Realty Ltd., The personal representatives of Wong Ping-shan and Others [1983] HKLR 445.

23. On the 11th October 1983 the Court of Appeal also discharged the injunction affecting the Hennessy Road Property and ordered the Kwun Tong Property fund to be paid out forthwith to Realty. On the same day the Plaintiff, who intended to apply to the Judicial Committee of the Privy Council for special leave to appeal from the Court of Appeal's previous orders, issued the fresh writ in the present action and obtained an ex parte order in this action from Jones J. on the 18th October 1983. This was followed by an order by me on the 24th January 1984 on application by inter partes summons injuncting Realty from dealing with the Hennessy Road Property and to retain the Kwun Tong Property fund in a joint account until the trial or further order.

24. By its Petition lodged on the 20th December 1983 the Plaintiff petitioned the Judicial Committee for special leave to appeal to Her Majesty in Council from both the substantive decision of the Court of Appeal on the 30th June 1983 and also from the order made by the Court of Appeal on the 11th October 1983 dismissing the Plaintiff's application for the re-hearing of the appeal from the decision of Mantell J.. The numerous grounds relied on in the Petition were countered by a vigorous Answer from all the Defendants which was lodged on the 26th January 1984.

25. The Petition raised seven principal grounds upon which the application for special leave was based. At this stage I confine myself to mentioning only those parts of the Petition which indicate the way in which the limitation issue was dealt with in the Hong Kong courts. In paragraph 2(c) it is admitted that both at first instance and on appeal the Plaintiff's counsel had conceded that by the date of the Defendants' applications for the dismissal of the first actions for want of prosecution the cause of action had become barred by the Limitation Ordinance.

26. In paragraph 2(d) it is asserted that the concession was made in error and reasons are stated why there was no limitation period applicable to the first actions by virtue of section 20(1) of the Limitation Ordinance and why, if there was a period of limitation, it was an unexpired period of 20 years by virtue of section 7(2) of the Ordinance.

27. The first principal ground of the Petition is stated in paragraph 4(a) to be that the Court of Appeal erred in accepting that a limitation period of six years was applicable to the Plaintiff's causes of action. In paragraph 15 it is admitted that the point that the Plaintiff's causes of action were not time barred was not taken at first instance or on appeal. It is further asserted that leading counsel for the Plaintiff wrongly conceded at first instance that the causes of action were time barred, overlooking sections 20(1) and 7(2) of the Limitation Ordinance, and that the Court of Appeal had accepted without argument that a limitation period of six years applied and had expired.

28. On the 2nd February 1984 the Judicial Committee heard the Plaintiff's application and special leave was refused with costs. In accordance with its usual practice in relation to applications of this nature the Judicial Committee did not hand down any reasons for its decision.

29. Accordingly the first actions were finally determined on the 2nd February 1984 but the Plaintiff had preserved its position by the present action in which it had obtained injunctions to inhibit the disposal by Realty of the Hennessy Road Property and the Kwun Tong Property fund.

30. It was against this background that all the Defendants in this action applied by summonses issued between the 10th and the 17th May 1984 under Order 18 rule 19 and the inherent jurisdiction of the court for the Writ and Statement of Claim in this action to be struck out and the action dismissed.

31. The principal ground for the Defendants' applications is that if this action is allowed to proceed to trial it must fail because all the Defendants will plead that the claim is time barred and the Plaintiff will be estopped from denying this by reason of the application of issue estoppel or alternatively the wider principle of the doctrine of res judicata which was applied in Yat Tung Investment Co. Ltd. v Dao Heng Bank Ltd. [1975] AC 581 (P.C.). This ground was advanced by Mr. Gatehouse on behalf of the individual Defendants who were the 2nd, 3rd, 4th and 5th Defendants and Mr. Buckley, leading counsel for Realty, adopted and supported Mr. Gatehouse's arguments on behalf of Realty after I had given him leave to amend Realty's summons during the first day of the hearing.

32. The Defendants relied, as an alternative basis for abuse, on the principle applied by the English Court of Appeal in Stephenson v Garnett [1898] 1 QB 677 (C.A.) where the issue raised by the action was identical with that heard and decided between the same parties by a county court judge upon an application for an order to tax the costs of a previous county court action. The Court of Appeal, while holding that the interlocutory proceeding for leave to proceed with the taxation of costs could not be made the foundation of a plea of res judicata in the strict sense, held that in all the circumstances the case was one which should be stayed under the inherent jurisdiction of the court as being frivolous and vexatious and an abuse of the process of the court.

33. This ground was advanced by Mr. Buckley and my understanding was that he and Mr. Gatehouse had divided thair submissions for convenience. Both Mr. Gatehouse and Mr. Buckley also relied on the final alternative of conventional estoppel arising from the consequences of the Plaintiff conducting its case one way until June 1983 as regards the limitation issue in the first actions involving the parties to the present action and then seeking to conduct its case another way in the present action as regards the same issue.

34. Mr. Sher, leading counsel for the Plaintiff, did not oppose the amendment of Realty's summons on the first day after Mr. Gatehouse had made his submissions on issue estoppel but pointed out that the summonses of the Defendants did not actually mention the issue estoppel point and that they only referred to limitation. He had come to deal with the applications on wide grounds with 55 authorities but none on issue estoppel and had had no inkling that issue estoppel might be raised until he had seen an affirmation made as late as the 22nd September 1984 by Mr. Spencer Lee, the solicitor for Realty. Mr. Sher informed the court that although taken by surprise on the issue estoppel point he was ready to deal with it but applied, with the concurrence of leading counsel for the Defendants, for an adjournment of one day at the end of the first day of the hearing. I granted the adjournment.

35. The Defendant's applications must be approached with the greatest care and circumspection as is the case in all applications to strike out under Order 18 rule 19 and the inherent jurisdiction of the court. The powers of the court to strike out a pleading and dismiss an action are only to be exercised in a plain and obvious case.

36. As regards the first ground of the application, which is issue estoppel, counsel for the Defendants made it clear that if this action proceeds all the Defendants will plead that it is time barred under the Limitation Ordinance by reason of the expiration of a six year period of limitation and rely on issue estoppel if section 20(1) or section 7(2) of the Limitation Ordinance are relied on in the Plaintiff's pleadings. The Defendants' application to strike out the Writ and Statement of Claim and dismiss the action on the ground that the action is frivolous, veratious and an abuse of the process of the court can only succeed on the issue estoppel ground if the court is satisfied that the Plaintiff's case is hopeless, because there is nothing before the court to suggest that issue estoppel does not arise or that, if it does arise, there are no special circumstances which should preclude the application of the doctrine of issue estoppel. If this be the position it is pointless to allow the action to proceed to inevitable defeat and it must be an abuse to permit the Plaintiff to continue: c.f. Riches v Director of Public Prosecutions [1973] 1 WLR 1019; [1973] 2 All E.R. 935 (C.A.).

37. For the Plaintiff Mr. Sher urged me not to deal with the issue estoppel matter on a striking out application. He contended that the issue estoppel point could not be exhaustively argued on a summary application, the law was obscure, and there had been no reference to estoppel until two weeks before the hearing.

38. As to the nature of the points of law involved, it seems to me that it is not always obvious whether a point of law is of such a character that it may be decided on the "plain and obvious" requirements of Order 18 rule 19 or whether it is of such a weighty character that it should be set down for argument under Order 33 rule 3 as a preliminary issue, or left to the trial: see Hubbuck v Wilkinson [1899] 1 QB 86 (C.A.) per Lindley M.R. at p. 91 and c.f. Kemsley v Foot [1951] 2 KB 34 (C.A.) where the English Court of Appeal applied Hubouck v Wilkinson but was nevertheless persuaded by the parties to treat the issue raised before the court as one for its decision after full argument.

39. When Buckley J. found himself, in Carl Zeiss Stiftung v Rayner & Keeler Ltd. (No. 3) [1970] 1 Ch.506, in a similar position as I faced on Mr. Sher's submission he observed at p. 537 E-F: -

"It has been suggested in this case that if the question whether the issue is res judicata, is a difficult or complicated one, this in itself is a sufficient ground for refusing to strike out the plea. I acnnot think that this is right. If, as will normally be the case, the relevant information is before the court before which the interlocutory application comes, the judge ought then to decide whether the issue is res judicata or not, nowever difficult or obscure the point may be, for it will not become less so by wailting for the trial. If on the other hand the necessary information is not before him, the application will be premature and should fall."

40. I respectfully adopt the same view and have done so on at least one other occasion. Hunter J. has recently expressed a similar considered view in Wharf Properties Ltd. v The Hong Kong and Kowloon Wharf and Godown Company Ltd. (H.C.A. No. 13431 of 1983) at p. 14.

41. In the present case no objection was taken in limine to the procedure adopted by the Defendants. Leading counsel from London were engaged on both sides and six days were allowed for the hearing. At the end of the first day Mr. Sher requested and was granted an adjournment of one day. I had the assistance of three leading counsel of the highest calibre and the arguments occupied four days. In such circumstances Mr. Sher's submission that the procedure was inappropriate, coming on the afternoon of the third effective day of the hearing, was, in my judgment, not sound and, having the necessary information before me, I considered that I should not shrink from dealing with the application. As Buckley J. pointed out in the Carl Zeiss Stiftung (No. 3) case, however difficult or obscure the points of law might be they would not become less so by waiting for determination by the preliminary issue procedure or at the trial.

42. It was common ground that the issue estoppel, if it exists in this case, is to be found in what proved to be the final decision of the Court of Appeal on the 30th June 1984 allowing the Defendants appeal against the decision of Mantell J. which had gone in favour of the Plaintiff.

43. As far as the factual basis for the estoppel is concerned Mr. Sher took the point that, although he had put his submissions on the law relating to issue estoppel on the assumption that limitation was included in the reasoning of the members of the Court of Appeal when dealing with the Defendants' appeals from Mantell J.'s decision, nevertheless the only reference to limitation was made by Sir Alan Huggins V.P. in his chronological table to which I have referred above. In Carl Zeiss Stiftung v Rayner & Keeler (No. 3) [1970] 1 Ch. 506 at p. 540 the question whether the court may look outside the formal record of the court which made the decision upon which it is sought to establish issue estoppel was left open by Buckley J. in the face of conflicting authorities upon which he had heard no argument. It sufficed for the purposes of the case before Buckley J. that he should deal with it on the assumption that he should have regard to the reasoned judgment of Cross J. and the speeches in the House of Lords that were before him.

44. On this question I have the benefit of the recent decision of a strong English Court of Appeal in Khan v Galechha International Ltd. [1980] 1 WLR 1482. In that case Brightman L.J., with whom Cumming-Bruce and Bridge L.JJ. agreed, addressing himself, at p. 1489-1490, to the nature of the inquiry which may be made to identify the issue, cited and applied the following passage from the speech of Lord Wilberforce in Carl Zeiss Stiftung v Rayner & Keeler Ltd. (No. 2) [1967] 1 AC 853 at pp. 964-965 :-

"The doctrine of issue estoppel generally is not a new one. It can certainly be found in the opinion of the judges delivered by De Grey C.J. in The Duchess of Kingston's Case (1776) 20 St. Tr. 355, 538n., a passage from which has been quoted by my noble and learned friend, Lord Reid, and an accepted re-statement of it was given by Coleridge J. in Reg. v Inhabitants of the Township of Hartington Middle Quarter (1855) 4 E. & B. 780, 794, which is also quoted by my noble and learned friend. Mr. Spencer-Bower, in his work on res judicata states the principle as being 'that the judicial decision was, or involved, a determination of the same question as that sought to be controverted in the litigation in which the estoppel is raised' (Res Judicata, p. 9) - a formulation which invites the inquiry how what is 'involved' in a decision is to be ascertained. One way of answering this is to say that any determination is involved in a decision if it is a 'necessary step' to the decision or a 'matter which it was necessary to decide, and which was actually decided, as the ground-work of the decision' (Reg. v Inhabitants of Hartington Middle Quarter Township 4 E. & B. 780, 794). And from this it follows that it is permissible to look not merely at the record of the judgment relied on, but at the reasons for it, the pleadings, the evidence (Brunsden v Humphrey (1884) 14 Q.B.D. 141) and if necessary other material to show what was the issue decided (Flitters v Allfrey (1874) L.R. 10 C.P. 29). The fact that the pleadings and the evidence may be referred to, suggests that the task of the court in the subsequent proceeding must include that of satisfying itself that the party against whom the estoppel is set up did actually raise the critical issue, or possibly, though I do not think that this point has yet been decided, that he had a fair opportunity, or that he ought, to have raised it."

45. I have no hesitation in following this recent and persuasive authority and I find that it is abundantly clear from all the material referred to in my earlier summary in this judgment of the salient events in the first action that: -

46. It seems to me that (2) above is neally the corollary of (1) because in making the concession that the relevant limitation period was six years which had expired the Plaintiff was at the same time failing to invoke sections 20(1) and 7(2) of the Limitation Ordinance. The Court of Appeal manifestly proceeded on the basis of the concession and did not therefore actually decide the limitation question after full argument in the appeal.

47. Mr. Gatehouse submitted that the principle of issue estoppel could be stated to be that: -

"In the absence of special circumstances, if an issue, whether of fact or law has been determined expressly or by necessary implication by a court of competent jurisdiction, and whether after full argument and evidence or by admission, and that issue forms a necessary step in the court's decision as distinct from a merely collateral matter, the party against whom the issue is determined is precluded by issue estoppel from controverting it in subsequent litigation against the same opponent; and it is immaterial that the decision of the court or the admission by the party was wrongly made."

48. On this limb of his argument Mr. Gatehouse relied on the decision of the English Court of Appeal in Khan's case. There the plaintiff had in 1974 sued the defendant company who were licensed money lenders to set aside a contract of loan and also a legal charge affecting the plaintiff's house which he had bought from the defendants with money advanced by them. The plaintiff claimed that the memorandum of contract was void and unenforceable because it did not comply with section 6 of the Moneylenders Act 1927. At the trial of the action Thompson J. held that the sum advanced to the plaintiff by the defendants was "money lent" within the meaning of section 6 of the Act and that the memorandum of contract complied with that section.

49. When the plaintiff appealed against the decision of Thompson J. the defendants entered a respondents' notice seeking to support the decision on the ground inter alia that the judge ought to have held that the transaction was not one of moneylending and was outside the scope of the Moneylenders Acts. At the hearing of the appeal counsel for the plaintiff conceded the points raised in the respondents' notice and the Court of Appeal dismissed the appeal by consent.

50. In a subsequent action by the plaintiff against the defendants in 1977 the plaintiff claimed that the loan and the charge was statute barred by section 13(1) of the 1927 Act and unenforceable. At the trial Vinelott J. found for the plaintiff and held that the transaction was a loan within the meaning of the Act, that the plaintiff was not estopped from so contending by the concessions made on his behalf in the previous proceedings and that the loan and charge were statute barred.

51. On appeal by the defendants the Court of Appeal had the benefit of much fuller arguments on the estoppel issue and the appeal was allowed. The Court of Appeal upheld Vinelott J.'s decision that the transaction was a loan but they went on to hold that the plaintiff was estopped from so contending by his counsel's concession that the contrary was the case made in the appeal in the first action. The court held that for the purposes of issue estoppel the concessions and admissions made in the Court of Appeal which led to the dismissal, by consent, of the appeal in the first action were just as efficacious as a judgment delivered after full agrument.

52. The court rejected as groundless and artifical the argument of the plaintiff's leading counsel that because the Court of Appeal will not, as a matter of practice, ever allow an appeal by consent, it followed that no estoppel could be founded on the concession made in the Court of Appeal in the first appeal in the first action.

53. In holding that the plaintiff's concession and admission in the Court of Appeal founded issue estoppel Brightman L.J., with whom Cumming-Bruce and Bridge L.JJ. Concurred, made it clear at p. 1489 that the court was applying what Lush J. described in Ord v Ord [1923] 2 KB 432 pp. 439 and 443 as the wider sense of res judicata which is not res judicata in the strict sense because the res has not been adjudicated upon but which is within the ambit of the maxim Nemo debit bis vexari and "prevents a litigant who has had an opportunity of proving a fact in support of his claim or defence and chosen not to rely on it from afterwards putting it before another tribunal."

54. Although Lush J. had only referred to a question of fact in Ord v Ord, at p. 1489 E in Khan's case Brightman L.J. cited the following observations of Lord Shaw in Hoystead v Commissioner of Taxation [1926] AC 155 (P.C.) at pp. 165-166 indicating that issue estoppel operated also in a wider field where questions of law were involved and erroneous admissions were made on matters fundamental to the court's decision:-

"In the opinion of their Lordships, it is settled, first, that the admission of a fact fundamental to the decision arrived at cannot be withdrawn and a fresh litigation started, with a view of obtaining another judgment upon a different assumption of fact; secondly, the same principle applies not only to an erroneous admission of a fundamental fact, but to an erroneous assumption as to the legal quality of that fact. Parties are not permitted to begin fresh litigations because of new views they may entertain of the law of the case, or new versions which they present as to what should be a proper apprehension by the court of the legal result either of the construction of the documents or the weight of certain circumstances. If this were permitted litigation would have no end, except when legal ingenuity is exhausted. It is a principle of law that this cannot be permitted, and ther e is abundant authority reiterating that principle. Thirdly, the same principle - namely, that of setting to rest rights of litigants, applies to the case where a point, fundamental to the decision, taken or assumed by the plaintiff and traversable by the defendant, has not been traversed. In that case also a defendant is bound by the judgment, although it may be true enough that subsequent light or ingenuity might suggest some traverse which had not been taken. The same principle of setting parties' rights to rest applies and estoppel occurs."

55. In relation to the circumstances of the case before the Court of Appeal in Khan's case Brightman L.J. observed at p. 1490 E-F: -

"The Court of Appeal gave judgment dismissing the appeal. The judgment was given by consent and the consent was given because the company claimed, and the plaintiff accepted, that there was no lending of money. In my view, that admission by the plaintiff, given to the court and founding the judgment by consent, was just as efficacious for the purpose of issue estoppel as a judicial decision by the court after argument founding a similar judgment. The only sensible approach of the law, in my view, is to treat an issue as laid at rest, not only if it is embodied in the terms of the judgment, or implicit in the judgment becaus e it is embodied in the spoken decision, but also if it is embodied in an admission made in the face of the court or implicit in a consent order."

56. Later at p. 1491 H he observed: -

"In this case the plaintiff had his opportunity, in support of his appeal on the previous occasion, of establishing that money was lent. He chose not to establish that position. His counsel got up in court and deliberately abandoned it. So it seems to me that he loses his right of establishing that same position before another tribunal."

57. Cumming-Bruce L.J., who concurred with Brightman L.J.'s judgment, indicated that he considered that Brightman L.J. had stated the law on issue estoppel as it was then established. Bridge L.J. agreed with Brightman L.J. but went on to emphasise that the basic principle on which issue estoppel is based is the maxim "nemo debet bis vexari pro una et eadem causa" and he added at p. 1493 A-C:-

"Here the issue, loan or no loan, was in the first round of litigation between the parties an issue raised in the Court of Appeal which, if the appeal had run its course, would not necessarily have been determined by the court, but might well have been determined by the court, as part of its reasoning in deciding whether or not the appeal should be allowed. In the event what happened was that the plaintiff, through his counsel, quite specifically and categorically choss to withdraw that issue from the consideration of the court on the basis that, in relation to that issue, he was bound to accept defeat and acknowledge that the case against him was unahswerable. If the self-same issue were now allowed to be raised and litigated in these proceedings, I ask myself, would it not be a case of the company being vexed a second time in relation to an issue which it was open to the plaintiff to have had determined in the previous proceedings? To that question, to my mind, there really can only be one answer."

58. The Court of Appeal applied the dicta cited above from the opinion of Lord Shaw in the Hoystead case to the effect that for purposes of issue estoppel an admission on a question fundamental to the decision of the court was just as effective as the judgment of the court after full argument. This opinion of the Judicial Committee, expressed by Lord Shaw, is no longer regarded as authority on estoppel in revenue cases after Caffoor v Income Tax Commissioners [1961] AC 584 (P.C.) but, as pointed out in the notes in Spencer Bower and Turner on Res Judicate, 2nd edition, at pp. 152 and 161, the opinion of Lord Shaw retains its authority as a statement of the general principles governing issue estoppal.

59. Indeed in Society of Medical Officers of Health v Hope [1960] AC 551 (H.L.) at p. 566 Lord Radcliffe, whilst rejecting Hoystead's case as an authority on estoppel in revenue cases, observed at p. 566 in relation to the opinion of Lord Shaw and the authority of that case:-

"That opinion is devoted to considering with weight and learning, and ultimately to rejecting, the proposition advanced by Sir John Simon on behalf of the commissioner that there could be no estoppel because the legal point which had been the subject of the High Court's decision had been conceded by admission and did not therefore embody the court's own direct judgment. The case stands as an authoritative contribution to the rule that in matters of estoppel what might have been said may be as important as what was actually said, and that, as between the parties themselves, law may indeed be formed sub-silentio."

60. I have dwelt on Khan's case at some length because it is a recent decision of a strong English Court of Appeal dealing with a developing branch of the law. The dicta of Brightman L.J. cited above, with which the other members of the court concurred, makes it clear that, for the purposes of issue estoppel the court equated an admission or concession on a point of law in the Court of Appeal with a judgment of that court on the same point after full argument. In doing so the court applied the dicta cited above of Lush J. in Ord v Ord and of Lord Shaw in Hoystead's case and invoked the doctrine of res judicata or issue estoppel in the wider sense which may be applicable where there has been no actual adjudication by a competent court and is based on the maxim "Nemo debet bis vexari".

61. As to the relevant ingredients of issue estoppel, I begin by adopting the definition of the requirements for a claim of estoppel per rem judicatam applied by Buckley J. in Carl Zeiss Stiftung v Rayner & Keeler (No. 3) [1970] 1 Ch. 506 at p. 538 in the following terms: -

"To make good a claim of estoppel per rem judicatam the party asserting the estoppel must establish: (1) that there has already been a judicial decision by a competent court or tribunal, (2) of a final character, (3) of the same question as that sought to be put in issue by the plea in respect of which the estoppel is claimed, (4) between the same parties, or their privies, as the parties between whom the question is sought to be put in issue."

62. The first requirement is satisfied in this case because there undoubtedly was a decision by the Court of Appeal as a competent court dismissing the first actions for want of prosecution. As to the second requirement that the decision should be of a final character, I respectfully adopt the reasoning of Buckley J. at pp. 538-9 in the Carl Zeiss Stiftung (No. 3) case for his conclusion that although many interlocutory orders clearly do not involve final deeision, some do and that:-

"Finality for this purpose means that the decision (a) is one which does not ex facie, as in the case of an order for an account or inquiry, leave something to be judicially determined or ascertained becfore the decision can become effective or enforceable, and (b) is not subject to subsequent discharge, rescission, modification or any other form of review by the court or tribunal making the decision."

63. In the present case the decision of the Court of Appeal clearly passes that test. It has finally determined the first actions.

64. No question arises as to the fourth requirement because the relevant parties concerned in both sets of proceedings here were the same. The crucial question arises in relation to the third requirement, namely, was the decision of the Court of Appeal a decision on the same question as that sought to be put in issue by the plea in respect of which the estoppel is claimed?

65. Treating the concession on the limitation issue as equally efficacious as a judgment after full argument, on the authority of the Hoystead and Khan cases, there was not a primary decision by the Court of Appeal on the limitation issue. The primary decision was that the first actions should be dismissed for want of prosecution. However if the concession, being equally efficacious as a judgment after full argument, on the limitation issue was fundamental to the primary decision of the Court of Appeal then issue estoppel may be founded in the present proceedings on the concession made to the Court of Appeal.

66. The relevant principles were succinctly expressed by Buckley J. in the Carl Zeiss Stiftung (No. 3) case at p.539 D-E in the following terms:-

"By way of "issue estoppel," however - a doctrine discussed in some detail in the House of Lords on the appeal on the summons to stay this action - it is possible that particular issues decided by Cross J. or the House of Lords, as incidents of the decision of the them primary issue, may be res judicatae, so that in other proceedings in this action or outside it between the same parties (that is the defendants and Messrs. Courts & Co.) or their privies, ejther party would be estopped from disputing them. In this connection one must consider what decisions in those earlier proceedings were necessary to the disposal of that application and whether they were of a final character in the relevant sense."

67. This passage on issue estoppel is clearly consistent with the often cited unanimous opinion of the House of Lords given by De Grey C.J. in The Duchess of Kingston's case (1776) 20 St. Tr. 355 (cited by Lord Reid in the Carl Zeiss Stiftung (No. 2) case at p. 913 E) in the following passage at p.583 n: -

"From the variety of cases relative to judgments being given in evidence in civil suits, these two deductions seem to follow as generally true: first, that the judgment of a court of concurrent jurisdiction directly upon the point, is as a plea, a bar, or as evidence, conclusive, between the same parties, upon the same matter, directly in question in another court: secondly, that the judgment of a court of exclusive jurisdiction directly upon the point, is, in like manner, conclusive upon the same matter, between the same parties, coming incidently in question in another court, for a different purpose. But neither the judgment of a concurrent or exclusive jurisdiction is evidence, of any matter which comes collaterally in question, though within their jurisdiction; nor of any matter incidentally cognizable: nor of any matter to be inferred by argument from the judgment."

68. Buckley J.'s statement of the relevant principles is also consistent with the often cited statement on issue estoppel by Coleridge J. in Reg. v Inhabitants of the Township of Hartington Middle Quarter (1855) 4 E & B 780 (also cited by Lord Reid in the Carl Zeiss Stiftung (No. 2) case at p. 914) where at p. 794 Coleridge J. observed: -

"The question then is, whether the [former] judgment concludes, not merely as to the point actually decided, but as to a matter which it was necessary to decide, and which was actually decided, as the groundwork of the decision itself, though not then directly the point at issue."

69. Various judicial formulations of the distinction between what matters decided incidental to a primary decision are or are not fundamental to the primary decision are helpfully set out in Spencer Bower & Turner at pp. 180 and 181. For my part I have accepted and applied the approach of Coleridge J. in the passage cited above from his judgment in Reg. v Inhabitants of the Township of Hartington Middle Quarter and that of Buckley J. in the Carl Zeiss Stiftung (No. 3) case at p. 539 E-F where he indicated that one must consider "... what decisions in those earlier proceedings were necessary to the disposal of that application and whether they were of a final character in the relevant sense."

70. In adopting this approach I have borne in mind the salutory warning contained in Spencer Bower & Turner at pp. 181-182 regarding the difficulty of identifying in practice the distinction between what is fundamental to a decision and what is merely collateral to it. The relevant passage which was approved by Megarry J. in Spens v I.R.C. [1970] 1 WLR 1173 at p. 1184 is as follows: -

"In order to make this essential distinction one has always to inquire with unrelenting severity - is the determination upon which it is sought to found an estoppel so fundamental to the substantive decision that the latter cannot stand (the words underlined by me are in italics in the text) without the former. Nothing less than this will do."

71. Both at first instance and on appeal it was essential for the court to determine whether or not the application to dismiss for want of prosecution was being made in a case where there was a fixed limitation period applicable to any of the causes of action and, if so, whether that period had expired. This was of fundamental importance because unless there are special circumstances (and there was no suggestion that special circumstances existed in this case) the effect of Hirkett v James [1978] AC 297 (H.L.) is that if there are no special circumstances and there is a fixed limitation period for the relevant cause of action which is unexpired and the plaintiff will be likely to issue a fresh writ if his first action is struck out, then that is conclusive ground for not striking out t he first action: Birkett v James per Lords Diplock at p. 325 E, Salmon at p. 328 E and Edmund-Davies at p. 334 B-C.

72. For this reason it is necessary for any court entertaining an application to dismiss an action for want of prosecution to determine first whether or not there is a fixed limitation term for the cause of action and, if so, whether that term has expired. The duty of the court to determine this question if the relevant material is before the court is emphasised by the decision of the English Court of Appeal in Forster v Outred & Co. [1982] 1 WLR 86 (C.A.). If there is held to be a fixed term which has expired, then the court gives no further consideration to the question of limitation but considers whether there has been inordinate and inexcusable delay which has caused prejudice to the defendant and, if satisfied that such delay and prejudice have been proved, goes on to exercise its discretion whether to dismiss the action.

73. That is in effect what happened in this case. The concession made by the Plaintiff at first instance that the limitation period was six years and that it had expired has the same effect for purposes of issue estoppel as a decision after full argument. In that sense the Court of Appeal is to be treated as having held, as part of its decision, that Mantell J. was right in notionally deciding that the relevant limitation period was six years and that that period had expired. In the circumstances of the case that decision (which I will call the "deemed decision") of the Court of Appeal was in every sense a deemed decision as to a matter which it was necessary to decide and is to be treated, by reason o f the concession by the Plaintiff, as having been actually decided by the Court of Appeal as the groundwork of the primary decision to dismiss the first actions for want of prosecution.

74. If the deemed decision on limitation was wrong because there was no limitation period or a 20 year limitation period under sections 20(1) or 7(2) respectively of the Limitation Ordinance then, in my judgment, the immediate foundation for the decision to dismiss the first actions has gone and the decision cannot stand.

75. Accordingly I concluded that the concession by the Plaintiff on the limitation issue related to a matter which it was necessary for the Court of Appeal to determine when deciding whether the first actions should be dismissed. The matter is to be deemed to have been actually decided by the Court of Appeal as part of the groundwork of their primary decision and was fundamental to that decision.

76. Mr. Sher pressed me with the argument that in determining whether a finding on a matter upon which it is sought to found issue estoppel was fundamental to the primary decision of the court, the test was whether a different outcome must inevitably have ensued if that finding were reversed. As Mr. Gatehouse pointed out, even if this argument were accepted it could not have won the day for the Plaintiff in the event of a 20 year period of limitation being held to be available to the Plaintiff's cause of action under section 7(2) of the Limitation Ordinance because in that event Birkett v James would have applied and the Court of Appeal would have dismissed the appeal against Mantell J.'s order.

77. Accordingly Mr. Sher pressed the argument in relation to section 20(1) of the Limitation Ordinance on the hypothesis of a decision, after argument, that there was no limitation period prescribed for the Plaintiff's cause of action. On that hypothesis he contended that it did not follow that there would be a different result because the question of laches would arise and Joyce v Joyce [1978] 1 WLR 1170 and The Sufina [1981] HKLR 197 would apply.

78. In support of this argument Mr. Sher relied on the following passage in Spencer Bower & Turner at p.179 and particularly on the words underlined by me: -

"Only determinations which are necessary to the decision - which are fundamental to it and without which it cannot stand - will found an issue estoppel. Other determinations, without which it would still be possible for the decision to stand, however definite be the language in which they are expressed, cannot support an issue estoppel between the parties between whom they were pronounced."

79. I rejected this argument in relation to issue estoppel because, in my judgment, it cannot stand with the following dicta of Bridge J. cited above in Khan's case at p. 1493 which I repeat because of its importance in the light of the circumstances of that case where the decision of Thompson J. might have been reversed on appeal either on the loan or no loan issue or on the issue concerning the compliance with section 6 of the 1927 Act:-

"Here the issue, a loan or no loan, was in the first round of litigation between the parties an issue raised in the Court of Appeal which, if the appeal had run its course, would not necessarily have been determined by the court, as part of its reasoning in deciding whether or not the appeal should be allowed."

80. Furthermore I was persuaded by the argument of Mr. Buckley who pointed out that if Mr. Sher's determinative argument were right it would produce the absurd result that however fundamental and clear the issue decided there could be no issue estoppel founded upon it if the party sought to be estopped could produce a hypothesis for the primary decision.

81. Mr. Sher contended that no issue estoppel can come out of the jurisdiction of the court to strike out a claim and dismiss an action for want of prosecution because, as Lord Diplock emphasised in Birkett v James at p. 317 D-E, the exercise of that jurisdiction involves the exercise by the judge of his discretion. He also relied on the dicta of Lord Salmon at p. 328 G in Birkett v James to the effect that a dismissal of an action for want of prosecution without any decision on the merits did not constitute res judicata and on dicta of Lord Edmund Davies to the like effect in the same case at p. 332 E citing Pople v Evans [1969] 2 Ch 255 and Hart v Hall & Pickles Ltd. [1969] 1 Q.B. 405.

82. As to the question of discretion, I accepted Mr. Backley's contention that Mr. Sher's argument could not be right because otherwise it would follow that many other situations, such as actions for specific performance, final injunctions and other discretionary equitable renedies, could not give rise to issue estoppel notwithstanding the determination of issues as part of the necessary groundwork of the court in arriving at its primary decision, albeit ultimately in the exercise of its diseretion.

83. The proposition that dismissal of an action for want of prosecution without a decision on the merits does not give rise to res judicata is by itself unassailable. Mr. Gatehouse acknowledged that there had been no decision on the merits in the application before Mantell J. or on appeal. However he stressed, and I agree, that the court was concerned here with issue estoppel or res judicata in the wider sense and it seems to me that in principle there is no reason why the concession on the limitation issue should not give rise to issue estoppel once it is held that the concession is as efficacious as a decision on that issue after full argument and that the decision of that issue was necessary as part of the groundwork of the primary decision on the application for dismissal of the first actions for want of prosecution.

84. Mr. Sher also relied on the often cited dicta of Knight Bruce V.C. in Barrs v Jackson 1 Y & C.C. Ch. Cas. 585 which is cited in Spencer Bower & Turner at p. 180 as one of several passages from the authorities which formulated the distinction between what is fundamental and what is merely collateral for the purposes of issue estoppel. On appeal the actual decision of Knight Bruce V.C. was reversed by Lord Lyndhurst who held that the point raised in the case had been actually decided by the House of Lords in Bouchier v Taylor 4 B.P.C. 708 and was therefore binding on the lower courts.

85. The latter decision seems to be regarded by high authority as having turned on a jurisdictional issue: Concha v Concha (1886) 11 App. Cas 541 (H.L.) per Lord Herschell at p. 556 and per Lord Blackburn at pp. 564-5; and the relevant dicta of Knight Bruce V.C. has often been cited as being unaffected by Lord Lyndhurst's judgment on appeal. Instances of this are referred to below.

86. The relevant dicta of Knight Bruce V.C. is contained in the following passages: -

"... generally the judgment, neither of a concurrent nor of an exclusive jurisdiction is conclusive evidence of any matter which came collaterally in question before it, though within the jurisdiction, or of any matter instantly cognizable, or of any matter to be inferred by argument by the judgment; and that a judgment is final only for its proper purpose and object".

87. Later in the same judgment Knight Bruce V.C. made the following observations which have been most frequently cited:-

"But it is, I think, to be collected that the rule against re-agitating matter adjudicated is subject generally to this restriction, that, however essential the establishment of particular facts may be to the soundness of a judicial decision, however it may proceed on them as established, and however binding and conclusive the decision made as to its immediate and direct object be, these facts are not all necessarily established conclusively between the parties, and that either may again litigate them for any other purpose as to which they may come in question, provided the immediate subject of the decision be not attempted to be witndrawn from its operation so as to defeat its direct object."

88. Relying on this dicta Mr. Sher stressed that the object of the proceedings before Mantell J. and the Court of Appeal was to strike out the first actions for want of prosecution and not on the merits; whereas the object of the present action is to try the issues on the merits. I was at first impressed by this argument because, on a preliminary consideration, the second passage of dicta of Knight Bruce V.C. seems to support the proposition that if an essential issue is conclusively determined between the parties in one set of proceedings for purpose A the same issue may nevertheless be litigated again by either party for purpose B.

89. However I concluded that this could not be the true meaning and effect of the relevant dicta because such a sweeping result would be inconsistent with the basic principles of issue estoppel as defined in the dicta, cited above, of De Grey C.J. in The Duchess of Kingston's case (1776) 20 St. Tr. 355 at p. 538 n where he observed:-

"... the judgment of a court of exclusive jurisdiction, directly on the point, is, in like manner, conclusive upon the same matter, between the same parties, coming incidentally in question in another court, for a different purpose. But neither the judgment of a concurrent or exclusive jurisdiction is evidence, of any matter which comes collaterally in question, though within their jurisdiction; nor of any matter to be inferred by argument from the judgment."

90. In Barrs v Jackson at p. 594 Knight Bruce V.C. himself cited this dicta of Lord Grey and clearly did not intend to controvert it in his judgment. It must follow that the relevant dicta of Knight Bruce V.C. are to be reconciled with and understood to have a meaning consistent with the principles laid down by Lord Grey. Thus in The Queen v Hutchings (1881) 6 QBD 300 at p. 304 Lord Selborne set out both the dicta of De Grey C.J. and the second passage of the dicta of Knight Bruce V.C. and reconciled them for the purposes of the case before him by the use of italics. In De Grey C.J.'s dicta he set out in italics the words "directly upon the point" and "nor of any matter incidentally cognizable". In the dicta of Knight Bruce V.C. after the word "provided" Lord Selborne set out in italics the words "the immediate subject of the decision" and "so as to defeat its direct object".

91. It seems to me that the initially wide terms of the dicta of Knight Bruce V.C. are out down by the proviso to the extent that if a matter decided in the first proceedings is fundamental to the primary decision (as distinct from a matter coming collaterally in question or being incidentally cognizable) then the matter is the immediate subject of the primary decision and may not be re-litigated between the same parties.

92. I am fortified in this view by the facts of Barrs v Jackson where Knight Bruce V.C. had to decide whether, in administration proceedings for the distribution of an estate in the Chancery Court, the grant of letters of administration by the Ecclesiastical Court, after the determination of the question which of the parties was the next of kin of the intestate, was conclusive evidence upon the question whe was the intestate's next of kin. In the course of his judgment and before the second passage of his dicta cited above he used words indicating clearly that he did not consider it necessary for the court to appoint the next of kin to be the administrator. Thus at p. 596 he observed: -

"The object of that proceeding and of the sentence was not distribution, but merely the appointment of an administrator, whose duty, when appointed, it would be to distribute the estate according to law. Nor was it of necessity that the next or any of the next of kin should be appointed to that office. There are cases, indeed, in which the sole next of kin of an intestate, though adult, present under no disability, and of unimpeached conduct, is excluded, notwithstanding the positive provisions of the Legislature in that respect: ... It is plainly not of the essence of such a sentence that the preferred person should be the next of kin to the intestate. It happened here that such in truth and expressly was the particular ground of what the Ecclesiastical Court did. But suppose the case of the Ecclesiastical Court excluding the next of kin from the administration, on the ground of some alleged fact disqualifying him in the judgment of that jurisdiction, notwithstanding admitting proximity of blood, is the truth of that alleged fact forever incontrovertibly established against him?"

93. These and subsequent observations by Knight Bruce V.C. indicate, in my judgment, that his entire judgment was coloured by the fact that he considered that it was not of the "essence" of the grant of letters of administration that the grantee should be the next of kin of the intestate.

94. Furthermore I can find nothing in the facts or reasoning adopted in any of the cases before me where the relevant dicta of Knight Bruce V.C. was cited that gives ground for a different interpretation of that dicta: see The Queen v Hutchings and Ord v Ord and Stephenson v Garnett [1898] 1 QB 677. In the latter case Collins L.J. relied on the relevant dicta when holding at p. 682 that: -

"It is very difficult to say that an interlocutory proceeding, whereby leave to proceed with the taxation of costs under a judgment was obtained, could be made the foundation of a plea of res judicata in an action to enforce the covenents in the deed. It would be very difficult to bring this case within the principles enunciated by Knight Bruce V.C. in Barrs v Jackson (1842) 1 Y & C.C.C. 585, principles which are untouched by the reversal of his decision by the Lord Chancellor."

95. In my judgment the relevant dicta of Knight Bruce V.C. is merely one of the numerous judicial formulations of the test to be applied to ascertain whether or not a determination upon which it is sought to found issue estoppel is fundamental to the relevant primary decision. In my judgment it does not, when propertly understood, sustain the submissions of Mr. Sher that no issue estoppel can arise here on the limitation issue because the object of the applications for dismissal of the first actions and the object of this action are different.

96. It was conceded by Mr. Gatehouse that where issue estoppel was sought to be founded upon an admission or concession in reliance on the Hoystead and the Khan principle there might be special circumstances justifying the court in refusing to apply the doctrine of issue estoppel: see Spencer Bower & Turner at p. 162. Under this head, and also under the head of the court's discretion whether or not to grant the Defendants' application to strike out and dismiss the action, Mr. Sher relied on five matters for his contention that the doctrine of issue estoppel should not be applied in the present case.

97. First, Mr. Sher submitted that the Defendants had contended in the first actions before the Judicial Committee that the Plaintiff's concession on the limitation issue in the Court of Appeal was not an essential ingredient in the Court of Appeal's decision. This, argued Mr. Sher, had in part stopped the Plaintiff from raising the limitation issue through the appellate process because the Judicial Committee had considered Birkett v James inapplicable and had stopped the Plaintiff re-opening the first actions on the limitation issue. Accordingly, Mr. Sher contended, the Plaintiff should not be stopped now from proceeding with the present action.

98. In paragraph 2(a) and (b) of the Plaintiff's Petition for special leave before the Judicial Committee it was alleged, citing Birkett v James, that it was an "essential ingredient" of the Defendants' applications for dismissal of the first actions for want of prosecution that by the date of the applications the Plaintiff's cause of action had become time barred by the Limitation Ordinance. In paragraphs 15 and 26 of the Petition it was pleaded that the fact that the Plaintiff's causes of action were not time barred went to the root of the Defendants' applications to strike out. The Petition was settled by leading counsel but not by Mr. Sher who necessarily was arguing in contradiction of those pleadings in the application before me in this action where the Plaintiff is not estopped by the submissions on its behalf before the Judicial Committee.

99. In paragraph 7 of the Defendants' Answer which was settled by Mr. Gatehouse and Mr. Buckley, it is pleaded in answer to the Plaintiff's assertion in its Petition that the new limitation point was "so clearly right that the contrary view is unarguable" that inter alia (in paragraph 7 (ii)) the Plaintiff had misconstrued the speeches in Birkett v James in asserting that it is an essential ingredient of an application to strike out that the cause of action has become time barred.

100. Mr. Gatehouse denied strongly that the Answer had denied that the concession on the limitation point in the Court of Appeal was an essential ingredient in that court's decision. He insisted that paragraph 7 of the Answer did not go any further than to question the general statement of law referred to in the opening words quoted in paragraph 7 of the Answer. The whole point of paragraph 7 was, he contended, to plead ex abundanti cautela that, as he actually argued before the Judicial Committee, the new limitation point was not a cureall point because Joyce v Joyce was in point and Birkett v James did not decide that where there was no fixed limitation period an application to dismiss for want of prosecution must fail.

101. I accepted Mr. Gatehouse's contentions on this point. However, in my judgment, Mr. Gatehouse was right in contending that even if it were held that he had raised the "non-essential" argument before the Judicial Committee, there are no grounds for contending that the Judicial Committee accepted such an argument as the ground for refusing special leave to appeal and denying the Plaintiff the oppertunity to re-open the first actions on the limitation point. Mr. Gatehouse specified no less than seven other grounds which I agree could have been relied upon by the Judicial Committee for refusing leave to appeal in the light of the co ntents of the Petition and the Answer and of the arguments appearing on the record of the hearing of the application for special leave. As no reasons were given for the decision of the Judicial Committee it seems to me to be unarguable in all the circumstances that the Defendants prevented the Plaintiff from raising the limitation issue in the first actions by persuading the Judicial Committee that the issue of limitation was not an essential ingredient of the Defendants' applications for the dismissal of the first actions for want of prosecution.

102. Mr. Sher's second matter was that Realty had been aware by its counsel of the limitation point in the lower courts and although counsel may have been justified in sitting tight his silence had brought his client victory. This awareness of the point was, Mr. Sher contended, relevant to estoppel because if the Plaintiff had been told about the point the case would have gone another way.

103. As far as the Court of Appeal hearing was concerned, it is clear from the record of the proceedings before the Judicial Committee that neither Mr. Gatehouse nor Mr. Buckley had seen the limitation point in the Court of Appeal. The same record indicates that at first instance junior counsel for Realty was concerned about limitation and did some research on the point but took no further action when leading counsel for the Plaintiff made his concession.

104. In the proceedings before the Judicial Committee the point was taken on behalf of the Plaintiff that it was the duty of the Defendants' counsel to direct the court's attention to the relevant provisions of the Limitation Ordinance. The record shows that that proposition was clearly not accepted by the Judicial Committee. If it was not the duty of counsel for any of the Defendants to inform the court or counsel for the Plaintiff of possible arguments in favour of the Plaintiff for the application of any particular provision of the Limitation Ordinance it seems to me that it cannot be right to conclude that the Defendants should be precluded from founding issue estoppel on the Plaintiff's concession on the limitation issue. In my judgment such a conclusion would only be warranted if the Defendants or their counsel had in some way abused their position or been in breach of duty to the court or to the Plaintiff, but there was no evidence to justify such a finding.

105. Mr. Sher's third point was that issue estoppel was notoriously difficult and technical and that unless it was absolutely clear that it operated the proper course for the court on the present application was to require the Defendants to plead the issue estoppel and let the Plaintiff answer.

106. As to the difficulty and technicality of issue estoppel, I have already indicated above that I have followed the approach of Buckley J. in the Carl Zeiss Stiftung (No. 3) case for the reasons given by him in that case. If the court concludes that it has before it all relevant material and that it can identify on a "plain and obvious" basis a clear issue estoppel situation then, in my judgment, there can be no point in requiring the issue estoppel to be pleaded and tried. In the present case I cannot see that pleading of the issue estoppel would assist the court and if an issue estoppel exists, as I consider it does, a direction for pleadings and trial of the issue can only have the effect of prolonging the proceedings and increasing the costs and prejudice which the Defendants will incur.

107. The fourth matter relied on by Mr. Sher was the contention that the finding of the Court of Appeal and Mantell J. was not the result of argument but a concession made in an interlocutory hearing.

108. I have already indicated that I have followed Buckley J. in the Carl Zeiss Stiftung (No. 3) case in holding above that a final decision in interlocutory proceedings can give rise to issue estoppel in subsequent proceedings between the same parties provided the requirements of issue estoppel are met. I have followed the Hoystead case as recently applied by the English Court of Appeal in Khan's case in holding that for the purposes of issue estoppel the concession made by the Plaintiff in the Court of Appeal on the limitation issue is as efficacious as a judgment given after full argument. I emphasise that the concession was not made in a default situation. It was made both at first instance and in the Court of Appeal at a time when the court was actively concerned with the question of limitation and both the parties and the court were fully aware of the fundamental importance of the limitation issue having regard to the implications of Birkett v James.

109. I have borne in mind that a passage in the opinion of the Judicial Committee expressed by Lord Shaw in Hoystead's case at p. 170 was subjected to critical comment in the obiter dicta of Lord Reid in Carl Zeiss Stiftung v Rayner & Keeler Ltd. (No. 2) [1967] AC 853 at pp. 915-917 where he questioned the breadth of the relevant passage of Lord Shaw's opinion and questioned whether the full rigour of the often cited passage from the judgment of Wigram V.C. in Henderson v Henderson (1843) 3 Hare 100, which was a cause estoppel case, should be applied without modification to issue estoppel cases.

110. Lord Reid also expressed concern regarding the possible injustice of the founding of issue estoppel arising out of failure to contest an issue in a case of trifling importance and observed that there was room for a good deal of more thought before the House of Lords settled the limits of issue estoppel. Similar views regarding the application of Henderson v Henderson to and the limits of issue estoppel were expressed obiter by Lord Upjohn in the same Carl Zeiss Stiftung case at p. 947. The warnings contained in those dicta were heeded by Megarry J. in Spens v I.R.C. [1970] 1 WLR 1173 at p. 1184 H.

111. Although there was no question of cause of action estoppel arising in the present case I do not consider that there was anything in the slightest degree trivial about the Plaintiff's position when appearing before the Court of Appeal to resist the appeal against the refusal of Mantell J. to dismiss the first consolidated actions for want of prosecution. The fate of the actions was in the balance and if, as the Plaintiff conceded, any future action was time barred, a reversal of Mantell J.'s judgment and dismissal of the first actions by the Court of Appeal would have destroyed the Plaintiff's claim for relief.

112. Furthermore there was no evidence before me to the effect that the question of limitation was the subject of concession before Mantell J. or in the Court of Appeal because the Plaintiff regarded the limitation issue as trivial or because the Plaintiff had decided to concede the issue because it was confident it would succeed on any of the other issues. Indeed the evidence of the Plaintiff's solicitor was that he had overlooked the possibility of relying on section 20(1) or section 7(2) of the Limitation Ordinance and he believed that leading counsel had done likewise. There was no evidence from the leading counsel concerned and I was informed that he was in Hong Kong at the time the hearing before me took place. Under these circumstances, I did not fell deterred by the warnings, weighty though they are, of Lords Reid and Upjohn in the Carl Zeiss Stiftung (No. 2) case from applying the doctrine of issue estoppel against the Plaintiff in this case by reason of the fact that the estoppel arises from a concession and not a judgment made after full argument on the limitation issue.

113. The fifth matter relied on by Mr. Sher was that the concession was made by mistake, but in my judgment this cannot be material in a situation where the Plaintiff by its leading counsel had every opportunity to raise the limitation issue which was fundamental to the application before Mantell J. and to the subsequent appeal to the Court of Appeal. The observations of Brightman and Bridge L.JJ. in Khan's case at pp. 1491 H and 1493 D are directly in point.

114. Accordingly I concluded that it was plain and obvious that if this action proceeded to trial the Defendants would plead that the causes of action were time barred and, if this were denied, they would plead and establish issue estoppel on the limitation point. In such circumstances it would, in my judgment after giving the matter anxious consideration, be an abuse of the process and vexatious to the Defendants if the action were permitted to proceed further.

115. No court will lightly dismiss an action without a hearing on the merits but in all the circumstances of this case I consider that justice will be done by the application in the public interest of the maxim "nemo debet bis vexari" which is the basis of issue estoppel. I therefore struck out the Plaintiff's claim and dismissed this action.

116. Having found that issue estoppel has bene established by the Defendants I do not consider that it is necessary or desirable to decide whether or not the failure of the Plaintiff to invoke section 20(1) or 7(2) of the Limitation Ordinance makes this a case for the application of the full rigour of the following wide dicta of Wigram V.C. in Henderson v Henderson (1843) 3 Hare 100 at p. 115:-

"... where a given matter becomes the subject of litigation in, and of adjudication by, a court of competent jurisdiction, the court requires the parties to that litigation to bring forward their whole case, and will not (except under special circumstances) permit the same parties to open the same subject of litigation in respect of matter which might have been brought forward as part of the subject in contest, but which was not brought forward, only because they have, from negligence, inadvertence, or even accident, omitted part of their case. The plea of res judicata applies, except in special cases, not only to points upon which the court was actually required by the parties to form an opinion and pronounce a judgment, but to every point which properly belonged to the subject of litigation, and which the parties, exercising reasonable diligence, might have brought forward at the time."

117. Spencer Bower & Turner at pp. 160-163 treats the Henderson v Henderson principle as applying to matters of omission and the Hoystead case as extending that principle to matters of admission subject to there being special circumstances of sufficient merit in any particular case to exclude the application of the principle. Khan's case however clearly follows the Hoystead case in equating admissions or concessions with judgments after full argument for the purposes of issue estoppel and I have found issue estoppel established on that basis after giving full weight to the implications of the warnings of Lords Reid and Upjohn in the Carl Zeiss Stiftung (No. 2) case regarding the limits for the application of issue estoppel.

118. In Yat Tung Investment Co. Ltd. v Dao Heng Bank Ltd. [1975] AC 581 (P.C.) the Judicial Committee upheld the application of the doctrine of res judicata in the wider sense against the plaintiff in a situation where the Judicial Committee held that the plaintiff, who was seeking as mortgagor to nullify a re-sale by the defendant bank, as mortgagee, to its co-defendant on the ground of fraud, could have impugned the bona fides of the re-sale by way of defence to the counterclaim of the bank in a previous action in which the bank had successfully counter-claimed against the plaintiff for the loss suffered by the bank on the re-sale.

119. Lord Kilbrandon when delivering the opinion of the Judicial Committee applied the dicta of Wigram V.C. in Henderson v Henderson in its full rigour and observed at p. 590 A-B:-

"But there is a wider sense in which the doctrine may be appealed to, so that it becomes an abuse of process to raise in subsequent proceedings matters which could and therefore should have been litigated in earlier proceedings. The locus classicus of that aspect of res judicata is the judgment of Wigram V.C. in Henderson v Henderson ..."

120. In my judgment the application of the wide dicta of Wigram V.C. in Henderson v Henderson in the Yat Tung case did not offend in any way against the warnings of Lords Reid and Upjohn in the Carl Zeiss Stiftung (No. 2) case because the dicta was applied in relation to a situation where a cause in the second case had already been determined in the first case: c.f. the dicta of Lord Upjohn at p. 946 F-G in the Carl Zeiss Stiftung (No. 2) case to the effect that the observations of Wigram V.C. in Henderson v Henderson apply in their full rigour in such a situation.

121. In the present case, which is not one of cause estoppel as defined by Diplock L.J. in Thoday v Thoday [1964] 181 at p. 197 cited in Spencer Bower & Turner at p. 149, I consider that I should leave open the question whether the wide principle of Henderson v Henderson should be applied. This matter is going further and if it becomes necessary on appeal to decide whether Henderson v Henderson is applicable the matter can be dealt with on appeal in the light of the warnings given by Lords Reid and Upjohn in the Carl Zeiss Stiftung (No. 2) case.

122. Having found that issue estoppel is established by the Plaintiffs the question whether, by bringing this action, the Plaintiff has been guilty of an abuse of the process within the principles applied in Stephenson v Garnett [1898] 1 Q.B. 677 does not arise because that case can only be applicable, if at all, where for technical reasons the doctrine of res judicata does not apply.

123. The argument based on conventional estoppel was never abandoned by the Defendants but it was not developed to any persuasive degree and I say no more about that argument than that I find it impossible to accept that the concession made by leading counsel in the Court of Appeal on the limitation issue could found any form of conventional estoppel.

Representation:

Mr. Jules Sher, Q.C. & Mr. John Bleach (Johnson, Stokes & Master) for Plaintiff.

Mr. Roger Buckley, Q.C. & Mr. Geoffrey Ma (Woo, Kwan, Lee & Lo) for 1st Defendant.

(Poon & Sum) for 4th & 5th Defendants.