Gealtex Toys Manufacturing Co Ltd v. Promotional Parners Group Ltd

DCCJ 95/2005

IN THE DISTRICT COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

CIVIL ACTION NO. 95 OF 2005

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BETWEEN

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Coram  :  Her Honour Judge H.C. Wong in Chambers

Dates of Hearing  :  2^nd September 2005

Date of Handing Down Decision  :  23^rd December 2005

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DECISION

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1.In this action, the Plaintiff’s claim against the Defendant for the recovery of the balance of payment for the mould tooling charges of $332,000.

2.The Defendant applies to strike out the Plaintiff’s claim for being scandalous, frivolous or vexations, and amounts to an abuse of the process of Court and/or it may prejudice or embarrass the fair trial of the action.

3.The Defendant’s summons asks to strike out the Plaintiff’s claim and for all future proceedings in this action be stayed.  The Plaintiff on the other hand applies by summons for summary judgment of its claim with interests.

Background

4.The history of dispute between the parties began when the Plaintiff commenced proceedings against the Defendant for outstanding money due for orders of toy walkie talkies manufactured by the Plaintiff in High Court Action 2577 of 2002.  At the pre-trial review of the said High Court action before Deputy Judge Mayo on 12 November 2004, the Plaintiff made an application to amend the statement of claim to include a claim for the balance of payment for the mould tooling charges of $332,000.  The application was vigorously opposed by the Defendant.  The application was subsequently withdrawn.

5.At the trial before Mr. Justice Burrell on 30 November 2004, the Plaintiff again made an application to amend its claim to include the mould tooling charges after the Defendant’s witness admitted to the outstanding mould charges.  The application was refused by the learned judge with the proviso that the ruling was without prejudice to the Plaintiff’s right to institute new proceedings in respect of the $332,000 mould tooling charges.

The Issue of Res judicata

6.Mr. A. Cheung, counsel for the Plaintiff, submitted that a withdrawal is no bar to a revival of the application unless the order prohibited it.  He relies on the practice notes 21/5/11 – 21/5/12 of the Hong Kong Civil Procedure 2004.

7.Mr. A. Cheung submitted that Deputy Judge Mayo and Burrell J. did not reject the Plaintiff’s application to amend its statement of claim to include the mould tooling charges on merits.  Mr. Justice Burrell had further directed the dismissal of the Plaintiff’s application was without prejudice to the Plaintiff instituting new, separation proceedings in respect of the mould tooling charges.

8.Mr. K. Cheung, counsel for the Defendant, submitted that the subject matter in controversy has been rendered res judicata in its strict sense.  Alternatively, the matter is res judicata in its wider sense since it could have and should have been put forward for decision on the first occasion.

9.Mr. K. Cheung referred to the principles summarized in Talbot v. Bershire County Council [1993] 4 All ER 9 where Stuart-Smith CJ referring to the case of Henderson v. Henderson (1843) 3 Hare 100 at 114 – 115, [1843 – 60] All ER Rep 378 at 381 – 382 where Wigram V-C stated the law thus:

“In trying this question I believe I state the rule of the Court correctly, when I say, that 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.”

Stuart-Smith LJ went on to say at p.13h:

“The rule is thus in two parts.  The first relates to those points which were actually decided by the court; this is res judicata in the strict sense.  Secondly, those which might have been brought forward at the time, but were not.  The second is not a true case of res judicata but rather is founded upon the principle of public policy in preventing multiplicity of actions, it being in the public interest that there should be an end to litigation; the court will stay or strike out the subsequent action as an abuse of process: see per Lord Wilberforce in Brisbane City Council v A-G for Queensland [1978] 3 All ER 30 at 36, [1979] AC 411 at 425.”

10.Mr. K. Cheung submitted that the Plaintiff’s withdrawal of the application to amend on 12 November 2004 before Deputy Judge Mayo was a calculated move.  The transcript of the hearing of the trial before Burrell J. revealed that the Plaintiff had withdrawn the application because it did not want to lose the trial dates.  Therefore, the decision is binding on the Plaintiff.

11.Mr. K. Cheung further argued that by instituting these proceedings in the District Court, the Plaintiff is making a third attempt to pursue the claim for the mould tooling charges.  It therefore is an abuse of process of court i.e. res judicata in the wider sense.

12.The present claim brought in the District Court cannot be considered as res judicata in the strict sense.  This claim was not part of the claim in HCA 2577/2002.  The attempt to amend the statement of claim to include this separate claim was withdrawn at the interlocutory stage before Deputy Judge Mayo.

13.The second attempt to amend and include the mould tooling charges was made due to an admission of the Defendant’s witness in the witness box.  This application was dismissed by Burrell J. with the direction that the refusal was without prejudice of the Plaintiff instituting further claim in a separate action for this separate item was not part of the production order for the toy walkie talkie. Therefore the issue was never litigated on.  The res judicata objection raised by the Defendant is therefore in the wider sense that the claim should have been brought forward in the high court trial.

14.The question for this court is, thus, whether it is against public policy in preventing multiplicity of actions.  In Stuart-Smith LJ’s words ‘it being in the public interest that there should be an end to litigation’.

15.Taking into consideration the background of the Plaintiff’s attempts to institute the claim for the mould tooling charges of $332,000 against the Defendant, and what was represented to the court before Deputy Judge Mayo and Mr. Justice Burrell in 2004, I find the claim of the mould tooling charges is not res judicata in the strict sense.  The application before Deputy Judge Mayo was an interlocutory application and did not bar the Plaintiff reviving the application in the middle of the trial.

16.Usually when an issue at the trial had been decided, the issue cannot be raised again in a new proceedings, but in this case Burrell J’s direction at the time of dismissal of the application directed that the ruling was without prejudice to the Plaintiff’s right of instituting new proceedings for the mould tooling charges.

17.It seems to me that under such circumstances, it would be against public interest to disallow the Plaintiff to institute these proceedings for the recovery of the tooling charges.  For this reason, I dismiss the Defendant’s application to strike out the Plaintiff’s claim.

18.On the basis that Mr. K. Cheung had conceded at the hearing that if the Defendant failed to strike out the Plaintiff’s claim, there shall be judgment to the Plaintiff on the Order 14 application, I grant an order in terms of the Plaintiff’s summons of 12 May 2005.

19.Costs nisi – Costs of both summonses and hearing to the Plaintiff to be taxed if not agreed with certificate for Counsel.

Parties :  Mr. Anthony Cheung instructed by Messrs. Benny Kong & Peter Tang for the Plaintiff.

Mr. Kam K.L. Cheung instructed by Messrs. Chiu, Szeto & Cheng for the Defendant.