Read the full judgment text of HCA 811/2010 on BabelCite. This Court of First Instance judgment was delivered on 6 February 2012 before Hon Poon J.
Civil procedure – res judicata – issue estoppel – abuse of process – default judgment – striking out – Tings Agreements – bare trustees – conspiracy – malicious falsehood – privies in interest – interlocutory determination on merits – Henderson v Henderson. The Tings, registered owners of rural lots in Hang Tau, entered into identical Tings Agreements in 1994 with Sino Favour Development Limited, under which Sino undertook construction at its own expense and the Tings were each guaranteed a profit of HK$200,000 and held their land as bare trustees for Sino. In 2005, Sino and Shiny Develop Limited (the Developers) sold the completed small houses through the Solicitors, who acted for the Developers. In the 2005 Actions, on 12 August 2005, Deputy Judge Saunders made an order permitting the sales to proceed expressly on the basis that the Tings were just bare trustees of the Developers, a determination not appealed. The Tings later joined the Solicitors as third parties in the 2005 Actions alleging negligence, but obtained leave to withdraw the third party notice on 20 May 2010 and commenced the present action on 2 June 2010, claiming conspiracy with intent to injure by unlawful means and malicious falsehood against the Solicitors. After the master dismissed the Solicitors' striking-out application, the Solicitors appealed and applied to set aside default judgment entered on 30 October 2010. Held, the three requirements for issue estoppel were satisfied: the issue whether the Tings were bare trustees was the same in both proceedings; Deputy Judge Saunders determined the issue on the merits at the 2005 Hearing (per Chu J in M & R Marketing Systems Inc v Tse Mee Shuen), and his decision was final notwithstanding its interlocutory nature; and the Solicitors were in sufficient identification with the Developers, being their agents in the Transactions and their alleged co-conspirators, so as to be privies in interest (following Gleeson v J Wippell & Co Ltd). Held, further, that none of the recognised exceptions to issue estoppel in interlocutory matters applied (per Mayo VP in Chu Hung Ching v Chan Kam Ming), and that the Tings' reliance on estoppel by deed and illegality of the Tings Agreements was misconceived; following Best Sheen Development Ltd v Official Receiver, the Developers and their privies could rely on the Agreements to establish bare trustee status. Held, also, that the present claims constituted an abuse of process because they could and should have been raised in the 2005 Actions after the Tings had joined the Solicitors as a third party (Henderson v Henderson; Johnson v Gore Wood & Co). Default judgment set aside; appeal allowed; statement of claim struck out; Tings' claims dismissed. Tings to pay the Solicitors' costs of the action, including the appeal, the setting aside application and the costs before the master, to be taxed if not agreed, with a certificate for two counsel.
Legal issues: Application of issue estoppel to bar the Tings from denying they were bare trustees · Effect of estoppel by deed and illegality on the bare trustee finding · Abuse of process in bringing conspiracy and malicious falsehood claims in fresh proceedings · Setting aside the default judgment
Outcome: Default judgment set aside; appeal allowed; statement of claim struck out; the Tings' claims against the Solicitors dismissed.
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