HCA 1545/2021
[2023] HKCFI 1511
IN THE HIGH COURT OF THE
HONG KONG SPECIAL ADMINISTRATIVE REGION
COURT OF FIRST INSTANCE
ACTION NO 1545 OF 2021
_____________
| BETWEEN | | |
| | WARREN GARY LICHTENSTEIN | Plaintiff |
and |
| | ANNABELLE SARAH BOND | 1st Defendant |
| | ANDREW CADER | 2nd Defendant |
_____________
| Before: | Deputy High Court Judge Alexander Stock, SC in Chambers |
| Date of Hearing: | 11 May 2023 |
| Date of Judgment: | 13 June 2023 |
____________________
JUDGMENT
____________________
A.INTRODUCTION
1. The plaintiff (“P”) appeals under Order 58 rule 1 Rules of the High Court (Cap. 4) (“RHC”), from the order of master Gary CC Lam dated 14 September 2022, ordering inter alia that as between P and the 1st defendant (“D1”), the Amended Statement of Claim of P be struck out and the action be dismissed.
2. The background is set out in the learned Master’s Decision dated 14 September 2022 (the “Decision”). The basis for the Decision was that it was plain and obvious that the present action against D1 is an abuse of process under the doctrine in Henderson v Henderson.
3. The appeal is by way of re-hearing de novo.
B. THE PLEADED CASE
4. In its key relevant points, P’s pleaded case is as follows[1]:
(1) P is the father of ILB born on 31 August 2007, and D1 is the mother of ILB. P and D1 had a romantic relationship from around February 2006 to February 2007, but never married.
(2) The 2nd defendant (“D2”) had a romantic relationship with D1 from around 2008 to January 2017. D2 owned and operated a bank account (the “JP Morgan Account”) which was either held in the joint names of D1 and D2, or held in D2’s name but operated for the joint benefit/use of D1 and D2.
(3) Between around July 2013 and February 2017 (the “Period”), D1 and D2 conspired and formulated an agreement/ arrangement with the common intention of defrauding P and/or to injure P’s economic interests (the “False Expenses Conspiracy”). In essence:
(a) D1 (acting for D1 and D2), who at the time received periodic payments for the benefit of ILB pursuant to an Order of DHCJ B Chu dated 28 June 2013 in HCMP 489/2013 (the “2013 Proceedings”), would retain such monies instead of using them to cover ILB’s maintenance expenses.
(b) D1 (acting for D1 and D2) would continue to receive such periodic payments from P on the false pretext that the funds were required by D1 to cover ILB’s maintenance expenses.
(c) Subsequently, the said funds would be transferred away and dissipated to be used for the joint benefit/use of D1 and D2 personally, rather than for ILB’s maintenance expenses.
(4) In execution of the False Expenses Conspiracy:
(a) During the Period, D1 (acting for D1 and D2) received periodic monthly and/or lump sum payments totaling HK$16,220,633.26 (set out in Schedule 1 to the Amended Statement of Claim) which were transferred by P to D1 for the specific purpose of covering ILB’s maintenance expenses.
(b) Between 8 October 2015 and 21 February 2017, after receiving such monies, D1 transferred the total sum of HK$13,739,168.26 (the “13.7m Sum”) which comprised of and originated from P’s monies, in 8 tranches (set out in Schedule 2 to the Amended Statement of Claim) to the JP Morgan Account for the joint benefit/use of D1 and D2 personally.
(c) D1 did not use any part of the 13.7m Sum for the specific purpose of covering ILB’s maintenance expenses.
(5) Accordingly, the 13.7m Sum was never used by D1 for the specific purpose for which it was transferred; but rather was converted to the use of D1 and D2, and ILB was wrongly deprived of it.
(6) In receiving P’s said monies, D1 intentionally concealed from P: that the 13.7m Sum would not be used for the specific purpose of covering ILB’s maintenance expenses; that it would be converted by D1/D2 into funds for their own personal benefit/use; and that ILB would be wrongly deprived of the benefit/use of the 13.7m Sum.
(7) D1 intentionally concealed such facts from P knowing that P would otherwise have ceased transferring his monies to D1 and/or would have applied to court to cease or reduce the amount of maintenance to be paid.
5. On this basis, P’s pleading asserts against D1 and D2 a number of causes of action, which are set out at Decision §8 ie unlawful means conspiracy; conspiracy to injure P’s economic interests; restitution/unjust enrichment/money had and received; constructive trust/liability to account; breach of fiduciary duty or Quistclose trust by D1; dishonest and/or knowing assistance by D2 in a breach of trust or fiduciary duty.
6. As further noted in the Decision:
(1) The 13.7m Sum represents amounts where were in fact paid by P to D1 pursuant to Hong Kong court order in the 2013 Proceedings for the maintenance of ILB - as well as pursuant to New York court orders for the enforcement of arrears of the same plus costs – and which were later paid by D1 to the JP Morgan Account[2].
(2) All of the causes of action pleaded by P are based on one central factual allegation and complaint namely that: money which was paid by P to D1 for the specific purpose of ILB’s maintenance (pursuant to court order) was not in fact used for that purpose; but rather an amount (ie the 13.7m Sum) was unlawfully paid into the JP Morgan account in tranches for the personal use and benefit of D1 and D2[3].
7. In broad terms, D1 argued (and the Master accepted) that the present proceedings are an abuse of process because they are an attempt to relitigate P’s complaint in relation to the 13.7m Sum which has already been ventilated and/or decided in the 2013 Proceedings; and further they amount to a collateral attack on the court’s judgment in the 2013 Proceedings, in particular the Judgment of B Chu J dated 30 November 2018 (the “2018 Judgment”).
C. PRINCIPLES ON HENDERSON v HENDERSON ABUSE OF PROCESS
8. There was no significant dispute between the parties on the principles applicable to striking out on the grounds of abuse of process, under the doctrine in Henderson v Henderson.
9. The main principles drawn from the case law[4], are as follows:
(1) The essence of the doctrine is that a party ought generally not to be permitted to raise in subsequent proceedings matters which that party could and should have raised in earlier proceedings.
(2) The onus is on the complaining party to establish that the subsequent litigation amounts to an abuse. The doctrine should only be applied where the essential element of abuse of process, is established. Otherwise, there is a danger of a party being shut out from bringing forward a genuine subject of litigation; and a party ought not lightly to be deprived of the right to have serious matters litigated.
(3) The abuse can take a number of forms:
(a) Oppression, vexation or the unjust harassment of the complaining party or his privy by the subsequent set of proceedings.
(b) The administration of justice being brought into disrepute. The courts bear in mind not only the parties before them but also the position of other litigants in the court process, and the need to ensure the fair distribution of court resources.
(c) Manifest unfairness to the complaining party or his privy.
(4) The issue whether there is an abuse is fact-sensitive, calling for a broad, merits-based assessment, and close scrutiny of the facts. The court is concerned with balancing the interests not only of the litigants before it, but also other interests involved in the administration of justice[5].
(5) The relevant factors include the following:
(a) Whether the impugned claims involve an attempt effectively to overturn or advance a collateral attack on the earlier proceedings.
(b) Whether the causes of action in the two sets of proceedings are based on the same factual matrix.
(c) Whether and to what extent the two sets of proceedings involve the same or similar evidence.
(d) Whether the relief sought in the two sets of proceedings is similar.
(e) Whether the party raising the impugned claims was involved in or had knowledge of the earlier proceedings.
(6) It is wrong to take a dogmatic approach and hold that because a matter could have been raised in earlier proceedings it should have been, so as to render the raising of it in later proceedings necessarily abuse[6]. Even if there is overlap of issues between an earlier set of concluded proceedings and a subsequent case, the overlap does not necessarily entail an abuse[7]. There is no presumption against the bringing of successive actions; and in a particular case there may be sensible reasons for advancing claims separately. It is in every case the burden of the complaining party to establish that it is an abuse of process for him to be subjected to the second action[8].
(7) In order for a party to fall within Henderson, it is not necessary for him to have been a litigant in the prior proceedings in which it is said that certain issues should and could have been advanced. Rather, it is sufficient that he has a privity with the litigant, meaning a sufficient degree of identification between the two to render it just to apply the Henderson doctrine[9].
(8) The broad merits-based assessment is not formulaic or of rigid application. The fact that the parties to the original action and to second action are different is a powerful factor in the application of the broad merits-based judgment, but does not operate as a bar to the application of the principle[10].
D. THE 2013 PROCEEDINGS
10. The Master referred to two Judgments and one Decision in the 2013 Proceedings, at Decision §§11-17. Below, I set out some salient portions of the same.
D1. The 2013 Judgment
11. The 2013 Proceedings concerned D1’s application against P for maintenance of ILB, under the Guardianship of Minors Ordinance (Cap. 13) (the “GMO”).
12. In May 2013, a 4-day trial took place on this issue, leading to the Judgment of DHCJ B Chu dated 28 June 2013 (the “2013 Judgment”).
13. The following points are notable from the 2013 Judgment:
(1) Her Ladyship set out the history of legal proceedings between the parties on the question of financial provision for ILB, including certain proceedings in the USA and UK (§§13-25), and interim orders in Hong Kong for the payment of monthly sums by P to D1 for ILB’s maintenance.
(2) The Court heard D1’s substantive application for financial provision for ILB, and P’s application for variation downwards of an interim maintenance order.
(3) The Court set out the principles to be applied on an application made under section 10(2) of the GMO: §§49-58. A summary of relevant considerations appears at §55, including: the welfare of the child; the needs of the caring parent (as relevant to the financial needs of the child); the incomes, earning capacities and financial resources of each parent; the need to guard against unreasonable claims with the disguised element of providing for the caring parent rather than the child; that any provision made is subject to review upon change of circumstances; and that the overall result should be fair, just and reasonable taking into account all circumstances.
(4) At §59 her Ladyship set out the main issues arising, namely: (i) the financial resources of P; (ii) the financial resources of D1; and (iii) the reasonable budget for ILB, including her accommodation. The Court then considered each issue in turn, by detailed reference to the evidence.
(5) One of the items considered under the heading “The Mother’s Financial Resources”, was her relationship with “Mr C”, who is D2 in the present proceedings. In short, P argued that D2 was a main financial resource of D1. D1’s evidence was that D2 had lent her substantial funds for legal fees and housing costs, which would have to be repaid; whilst P argued that the funds provided were by way of gift. On this point, the Court held that the alleged loans, if they were loans, were “soft” loans, with no sufficient evidence that they would be enforced now or in the foreseeable future (§159); and that the loans were resources available to D1 in the foreseeable future (§161).
(6) However, at §162 the Court took the view that whatever resources D1 received or may continue to receive from D2 in future by way of “loans”, should not go towards reducing P’s primary legal responsibility to provide reasonable maintenance for ILB in accordance with the principles in the case law. D1 would be entitled to keep any resources from Mr C for her own use whether to supplement ILB’s expenses above what P was ordered to pay, or to meet her own personal needs/expenses.
(7) Having considered all the evidence and relevant factors, including various heads of ILB’s expenses, her Ladyship ordered inter alia that P pay to D1 HK$290,000 per month as periodical payments for the benefit of ILB as from 1 January 2013 (the “2013 Order”).
14. It is apparently uncontroversial that P failed to comply with the 2013 Order for around 28 months between July 2013 to October 2015, which led to D1 issuing successful enforcement proceedings in New York. P eventually paid all the arrears and legal costs[11].
D2. The 2017 Decision
15. By a Decision dated 30 November 2017 (the “2017 Decision”), B Chu J considered and dismissed D1’s application for litigation funding in respect of a forthcoming 3-day trial to commence May 2018.
16. The said trial was the subject-matter of the 2018 Judgment referred to below; concerning, in essence, cross-applications for variation of the amounts payable under the 2013 Order.
17. The following points are notable from the 2017 Decision (with emphasis added in quoted portions):
(1) The Court considered and applied the principles on litigation funding applications set out in Currey v Currey [2006] EWCA Civ 1338 as followed in Hong Kong (§§5-6). The overarching enquiry was whether D1 had demonstrated that she could not reasonably procure legal advice and representation by any other means, which included enquiry into her assets and financial resources (§25). P argued that: D1 had not made full and frank financial disclosure of her means; the Court should make “robust assumptions” against D1; D1 did not satisfy the Currey test; and D1’s cost estimate was in any event too high (§26).
(2) P’s arguments included setting out the large amount of money provided by him to D1 and others for ILB’s benefit from 2006 to 2017, and asking where had all the money gone and whether it had truly been spent ILB’s benefit (§48). At §50, her Ladyship indicated that whether (much of) these sums had been spent towards ILB’s maintenance or for her benefit, would be the “main disputed issue for the Trial”. See also:
“39. However, whether the Mother has been applying the entirety of the ordered periodical payments towards the maintenance or for the benefit of ILB, or part thereof for the Mother’s personal benefit will be mainly a matter of evidence. As seen later in this decision, there is a major dispute as to the whereabouts of a sum of about HKD13.7m paid by the Father for benefit of ILB but transferred out by the Mother from her bank account.
…
42. This Court made the above direction on the understanding that all supporting evidence supplied by the Mother in relation to ILB’s expenses will be provided to an independent accountant who will then be able to prepare an analysis of whether all or part of the Father’s payments had been applied for ILB’s maintenance/expenses. No doubt, there may not be documentary evidence to support all of ILB’s expenses, but ultimately, this Court will need to decide what ILB’s reasonable expenses had been, and whether the Father had overpaid or underpaid”.
(3) From §§51 to 78, her Ladyship entered into a lengthy analysis under the heading “The whereabouts of a sum of about HKD13.7m”. In summary:
(a) The main query over D1’s financial resources was the whereabouts of a sum of HK$13,739,168.26, transferred by D1 from her bank account to the JP Morgan Account from October 2015 to February 2017, which came from amounts paid by P for ILB’s benefit (§52);
(b) The matter had been raised and addressed in correspondence, and also in affidavit evidence filed by D1; broadly to the effect that the payments to the JP Morgan Account were repayments to Mr C (ie D2) for his contributions to ILB’s maintenance during the period that P was in arrears of the maintenance which had been ordered in 2013.
(c) A perusal of the affidavit evidence makes clear that P’s complaint about the 13.7m Sum was ventilated in some detail in the evidence before the Court at the litigation funding hearing. Notably, P’s 26th affidavit, filed in opposition to D1’s application for litigation funding, particularised precisely the same transfers from D1 to the JP Morgan Account as are set out in Schedule 2 to the Amended Statement of Claim in these proceedings, in the context of arguing that the JP Morgan Account in truth belonged to D1 and was an account for accumulating her nest egg; and further that D1 had been misappropriating child support from the start. D1 sought to respond to this complaint in her 4th, 8th and 9th affidavits.
(d) B Chu J noted various difficulties with D1’s evidence and case on point, including inconsistency between her position taken in correspondence and on affidavit (§57), and an email explanation given by D2, the figures in which were discrepant with the 13.7m Sum (§§62, 64, 67 & 70).
(e) The Court said at §65: “The Mother had said in her 8th affidavit that the JP Morgan Account belonged to Mr C and not to her. The Father does not accept this, and I understand that he is seeking supporting documents from the Mother, such as the bank transfer instructions. This is however a matter to be determined at the Trial”.
(f) After noting various inconsistent/unsatisfactory features of D1’s evidence and position regarding this sum, the Court said at §73 that: “Whether the sum of HKD13.7m was indeed for repayments is clearly a matter to be determined by this Court at the Trial”.
(g) Her Ladyship further reasoned:
“76. …even on a broad brush approach, what the Mother alleged that she had paid or refunded to C for ILB’s housing costs seemed to exceed the amount of the Father’ contribution for the accommodation for ILB and/or any shortfall on the maintenance payments as ordered by this Court.
77. …the Mother is [not] entitled to a blank cheque for ILB … [and has an] obligation to make full disclosure and to account as to how the monies paid by the Father has been spent on ILB…The Mother was in fact ordered on 3 August 2017 to provide all supporting documents and evidence of actual payments of ILB for the past 2 years, but … it seems that she still had not done so.
78. As said, the whereabouts of the total sum of about HKD13.7m or whether those were repayments to Mr C will be a matter for the Trial, and it is not for the Court at this interim stage to make any finding. I accept however that the Mother’s disclosure in relation to the HKD13.7m has so far not been satisfactory.”
(4) The Court ultimately held that D1 had not been lacking in financial resources since the 2013 Order, and had provided very little supporting documentation regarding her own financial resources (§87). Her financial disclosure had so far not been satisfactory, in particular regarding the 13.7m Sum, and documents supporting ILB’s expenses and her own financial resources. D1 had not discharged the burden on her or satisfied the test in Currey v Currey, such that her application was dismissed (§§92-93).
D3. The 2018Judgment
18. In May 2018, a trial took place (the “2018 Trial”) leading to 2018 Judgment (ie Judgment of B Chu J dated 30 November 2018). There were five summonses before the Court regarding financial provision for ILB including: (i) D1’s summons for P to pay the differences between the periodical payments in the 2013 Order and index-linked amounts; (ii) P’s summons for downward variations of the periodical payments in the 2013 Order; (iii) P’s summons for reimbursement of certain amounts said to have been overpaid by P to D1 for ILB’s benefit[12].
19. Following a detailed judgment her Ladyship, amongst other things, varied downwards the periodic payments provided for in the 2013 Order, and ordered D1 to reimburse certain amounts which P had paid in respect of housing costs (§213).
20. The following features of the 2018 Judgment are notable (with emphasis added in quoted portions):
(1) The Court referred to 8 affidavits filed by P and 10 filed by D1 in relation to the five summonses, and filed in (inter alia) D1’s application for litigation funding (§16). It is apparent that after the 2017 Decision, P filed a Questionnaire which was responded to by D1’s 11th affidavit, including questions and responsive evidence regarding the alleged loans from D2 to D1, and P’s complaint about the 13.7m Sum.
(2) The Court appointed a single joint expert to (inter alia) analyse D1’s evidence regarding, and report on, the amount of ILB’s expenses supported by documentary evidence from July 2015 to March 2018 (§§18-20).
(3) From §§25-42, her Ladyship set out the principles on variation of periodical payments under the GMO. In short, in order to trigger the jurisdiction to order variation, there must exist a material change of circumstances (§38). Once the jurisdiction is triggered the court is entitled the consider all the circumstances of the case (§42). The court is not required to proceed from the starting point of the original order, but looks at the matter afresh with any change of circumstances being one of the factors considered (§37).
(4) D1 was in these proceedings keen to emphasise §§29-31, where the Court referred to the general approach to the discretion regarding periodical payments under section 10 of the GMO; including (at §31) that where there are grounds for belief that a mother is taking advantage by spending payments on things clearly not for the child’s benefit, there needs to be protection for the father, who may require an account of monies spent and may revert to the court if necessary for his obligations to be reconsidered.
(5) In the main body of the Judgment, the Court considered and made factual findings in relation to a wide variety of factors under various headings[13].
(6) From §§52 to 61, the Court made findings/observations under the heading “The Mother’s lack of supporting documentation”. In essence, the Court upheld (certain of) P’s criticisms that D1 had given unsatisfactory evidence and disclosure regarding ILB’s monthly expenses. Her Ladyship accepted that “the Mother’s evidence was unsatisfactory, her disclosure in relation to ILB’s expenses was vague, piecemeal and confusing and there were no sufficient supporting documents” (§56). However, the Court had to consider all the circumstances of the case in exercising its discretion (§60). Whilst D1’s evidence was unsatisfactory and had failed to provide sufficient documentary proof, this should not deprive ILB of reasonable maintenance from her father (§61).
(7) From §§68 to 73, the Court considered P’s complaint about the 13.7m Sum, in the following terms:
“IV. The whereabouts of an alleged sum of HK$13.7m
68.As seen in the Litigation Funding Decision, it was not clear as to when the Mother and Mr C separated, whether it was in May 2016 or January 2017, but it appeared that the Mother had continued to have access of around US$10,000-US$20,000 per month from Mr C until January 2017. Further, there was an amount of HK$13.7m transferred by the Mother to the JP Morgan Account referred to in the Litigation Funding Decision which the Mother said was for repayments to Mr C for contributions Mr C made towards ILB’s accommodation during the 28 months when the Father failed to comply with the 2013 Order. According to the Mother, the JP Morgan Account belonged to Mr C beneficially. Mr C had sent two emails, one to confirm that “his” JP Morgan account is and has always been in his name and the other one to confirm the outstanding balance. What Mr C had said in his emails did not really clear up the matter.
69.As said in the Litigation Funding Decision, even assuming the JP Morgan Account was Mr C’s and those were indeed repayments from the Mother to Mr C , there was still no explanation from the Mother as to why she had to repay to Mr C more than she said she had borrowed from Mr C and further what she said she had borrowed from Mr C was almost double ILB’s housing needs.
70.Anyway, at the time of the Litigation Funding Summons, the burden was on the Mother to satisfy this Court that she had no other financial resources to meet her legal costs. She failed to discharge the burden and thus failed in her application.
71.The Father does not accept that the JP Morgan Account belonged to Mr C and had said at the time of the Litigation Funding Summons that he was seeking supporting documents from the Mother such as the bank transfer instructions. The Father complained that the Mother only provided redacted documents. However, there was no application by the Father for any specific discovery of the unredacted documents.
72. The Father had in Annexure 10 asked that the Court should take a robust assumption that the Mother is lying about the entire situation and that she is the true beneficiary of this savings account.
73. The burden will shift to the Father to satisfy the Court if it is his case that the monies in the JP Morgan Account are available for the Mother to use to contribute towards ILB’s maintenance. There was no such submission from Mrs Remedios. Anyway, as I have said, after the Litigation Funding Decision there has been no further application by the Father for specific discovery, and without further evidence, I find there is currently no sufficient evidence for this Court to decide whether the Mother is or is not the beneficial owner of the JP Morgan Account”.
(8) At §§169-170, part of the concluding sections of the Judgment, the Court held as follows:
“The 9 disputed issues under the Variation Summons in the Scott Schedule
I. Issue 1 and Issue 2 – whether the Mother has applied the entirety of payments from the Father towards ILB’s maintenance and whether there should be any reimbursement
169. The Father’s case is that the Mother has not applied the entirety of the payments towards ILB’s maintenance. There is no sufficient evidence that the Mother has not applied the entirety of the payments towards ILB’s maintenance save that she has said since August 2017. She has applied the amount towards her legal costs. However, I find there was no sufficient evidence to support what she said. I will come to reimbursement later.
II. Issue 3 and Issue 4 – The Mother’s indebtedness to Mr C and if any whether such indebtedness was applied towards ILB’s maintenance
170. As for whether the Mother’s alleged indebtedness to Mr C, the Mother has not satisfied this Court that the amount allegedly due to Mr C of US$7,336.524 is repayable by her or that Mr C is demanding repayment. In any event, I find there was no sufficient evidence that the Mother had to borrow from Mr C for ILB’s expenses that were not covered by the periodical payments from the Father.
(9) In respect of P’s variation summons, the Court made a variation downwards of the periodic payments to HK$121,000 per month, taking into account all the circumstances of the case (§186). As part of the analysis, the Court considered that although D1’s evidence had been unsatisfactory and she had failed to produce sufficient supporting documentary evidence for her claims, ILB’s interests should not be affected by D1’s failure (§184).
E.ANALYSIS ON ABUSE OF PROCESS
21. For the following reasons, I accept the submissions made by Ms Mairéad Rattigan SC[14] for D1, that the current proceedings are an abuse of process under the doctrine in Henderson v Henderson,such that they should be struck out.
(1) In substance, the complaint raised in these proceedings is the same as, or is at least largely encompassed within, the complaint deployed by P against D1 in the 2013 Proceedings including the 2018 Trial, in relation to precisely the same sum of money; namely that the 13.7m Sum which was supposed to be for maintenance and was received pursuant to court orders for maintenance, was instead diverted to the JP Morgan account for D1’s other purposes: see especially §§17(2) & (3), 20(7) & (8) above.
(2) The said complaint was deployed by P in evidence and submissions, as one of the weapons in his armoury of arguments seeking to reduce the amounts payable between the parties for ILB’s maintenance. The complaint was made in P’s affidavit evidence and Questionnaire, and responded to in D1’s affidavits: see §§17(3)(b)&(c), 20(1) above. It would have been open to P’s legal team to cross-examine D1 on point, to pursue applications for further discovery if desired (see 2018 Judgment §§71 and 73, supra), and to make such further submissions as they saw fit.
(3) To the extent that the point was not, at the 2018 Trial, pursued by P’s team as vigorously as it might have been (see eg 2018 Judgment §73), it was open to them to pursue it with more vigour, and I take the view that they should have done had they wished to further press the point, particularly where: (i) the complaint had been squarely deployed by P himself in evidence and argument, eliciting evidential response from D1; and (ii) the 2017 Decision made clear that the issue was going to be ventilated and determined at the 2018 Trial: see §17(3)(e)(f)&(g) above.
(4) P’s complaint regarding the 13.7m Sum did not, apparently, of itself achieve the objective for which it was deployed in the previous proceedings; namely as part of P’s arguments to reduce the amounts payable to D1. Notwithstanding this, P now seeks by these proceedings to redeploy the same point in order to achieve the same or a similar objective as a matter of substance; ie an effective “clawing back” by a side-wind of a portion of the amounts which the Court – having considered P’s complaint regarding the 13.7m Sum – ordered to be fairly payable as between the parties for ILB’s maintenance. In this sense, I take the view that the present proceedings are an unacceptable collateral attack on the 2018 Judgment.
(5) In addition, the present claim “twice vexes” D1 with the same complaint that has already been ventilated in the 2013 Proceedings; and indeed “twice vexes” the courts. To permit the P to reanimate his complaint having already deployed it in the 2013 Proceedings - and having had the opportunity to do so with more rigour if he so wished - would amount to an unacceptable waste of the courts’ limited resources to the detriment of other litigants; and further, with a tendency to bring the administration of justice into disrepute.
(6) I am cognizant that the burden is on D1 to establish abuse of process, that the threshold is high, that a party ought not lightly to be deprived of their right to litigate serious matters, and that striking out is for plain and obvious cases: see principles set out above. Taking a broad merits-based assessment in light of all the circumstances, and balancing the competing interests of a private and public nature, I am satisfied that that threshold has been met on the facts of this particular case.
(7) As a collateral and additional matter, I rely also on the fact that P could (and should) have pursued his complaint in relation to the 13.7m Sum at the 2018 Trial, by way of a specific claim for reimbursement of that sum or portions of it; noting that P pursued reimbursement claims in respect of other amounts said to have been overpaid to D1. Had such a claim succeeded it would, again, have achieved the same or a similar result to that sought in the present action. However, I would have reached the same conclusion on abuse of process, even had I not taken into account this additional feature.
22. In short, I agree with the Master’s reasoning on abuse of process, though I arrive at the same conclusion de novo and following a fresh consideration of the relevant balancing exercise.
23. Mr Ambrose Ho SC[15], for P, levelled a number of arguments in opposition to the striking out, and to the effect that the Master’s reasoning was in error.
24. Below, I deal briefly with what I regard as the main such arguments.
25. First, it was emphasised that D2 was not (and could not appropriately have been) a party to the 2013 Proceedings. The present proceedings, it was argued, are the only and proper forum to ventilate the complaint now made in terms of a conspiracy between D1 and D2 regarding the 13.7m Sum; which is the crux of this action. The fact that the parties to the original action and the second action are different is a powerful (though not conclusive) factor in the assessment of Henderson abuse: see §9(8) above.
26. I am not, however, persuaded by this argument. The pertinent question is at present whether the claim against D1 in these proceedings, is abusive. The complaints made by P against D1 in these proceedings are the same or very similar to those levelled against D1 in the previous proceedings in relation to the 13.7m Sum; and there is identity of parties as between P and D1 in both sets of proceedings. I do not see that the addition of D2 as a co-defendant and the framing of the complaint as a conspiracy significantly alters, in substance, the nature of the complaint made against D1. Nor does it per se render P’s repetition of complaints against D1 in these proceedings any less abusive.
27. Second, and related, Mr Ho argued that the issues in the two sets of proceedings are completely different. Whilst the 2018 Judgment was concerned with potential downward variation of periodic payments made for ILB’s maintenance as a result of change of circumstances, the present proceedings concern whether the 13.7m Sum was paid for a specific purpose, the proprietary interests in the funds, the beneficial ownership of the JP Morgan Account, and whether there was a conspiracy between D1 and D2 to wrongfully misuse those funds. The said issues were not, it was argued, considered fully or at all, nor did they fall to be determined, in the 2013 Proceedings.
28. It is of course correct that the juridical task which the Court performed in the previous proceedings was not the same as that which would be undertaken in the present - and that the causes of action differ. This does not, however, preclude the application of the Henderson doctrine. Indeed, it is an ordinary incident of that doctrine that there need not be identity of causes of action as between the two sets of proceedings; for if there were, an estoppel would arise, and there would be no need to invoke Henderson[16]. The substance of the underlying complaint, is the same. It relates to precisely the same funds said to have been received by D1 and wrongfully paid into the JP Morgan Account. The factual matrix is the same and the relevant evidence would be the same or very similar.
29. Mr Ho highlighted §73 of the 2018 Judgment, arguing that the Court simply made no finding as to who was the beneficial owner of the JP Morgan Account. However, immediately preceding the last sentence of that paragraph, her Ladyship referred to the absence of any further application for specific discovery by P on this disputed issue. The context included P’s arguments that the Court should conclude that D1 was lying and was the true beneficiary of the account (§72); and that D1 had been misapplying funds for her own benefit including the 13.7m Sum.
30. The net effect is that P deployed this line of argument in seeking to reduce the quantum of payments, which was addressed in both side’s evidence, but the Court did not find for him on point for the purposes of arriving at an appropriate figure (see 2018 Judgment §169, supra). Again, having deployed the point unsuccessfully for such purposes, I do not see that it is fairly open to P to now re-deploy it in separate proceedings to seek to adjust ex post facto the distribution of resources at which the Court has already arrived in light of all the circumstances. To permit P to so proceed would unacceptably prejudice the public interest in the finality of litigation.
31. Third, Mr Ho emphasised that the mere fact that a point or argument could have been raised in the earlier proceedings does not necessarily entail that it should: see principles at §9(6) above.
32. I accept that this is the correct approach; and it seems that whether a line of argument or issue should have been raised in earlier proceedings is ultimately a matter of judgment which forms part of the fact-sensitive balancing exercise conducted when assessing abuse of process.
33. In the present case, P did deploy his complaint regarding the 13.7m Sum in the previous proceedings, and insofar as it was not then pressed as hard as it might have been, I am satisfied that it should have been, for the reasons at §21(3) above.
F. OTHER GROUNDS FOR STRIKING OUT
34. In the alternative, D1 sought to strike-out the proceedings on the basis that there is no reasonable cause of action on the pleadings, and/or they are frivolous or vexatious, being bound to fail: Order 19 rule 19(1)(a) and (b) RHC.
35. Given my conclusions above, I do not consider it necessary to deal with these alternative points[17].
G. DISPOSITION
36. For the above reasons, I dismiss P’s appeal.
37. Given that the basis for striking out is abuse of process, I consider that an order for indemnity costs is appropriate.
38. I will make a costs order nisi that P do pay D1’s costs of the appeal on an indemnity basis, to be summarily assessed on paper if not agreed.
39. Any application to vary the said order nisi shall be made in writing within 10 days of the handing down of this Judgment, limited to 4 pages. The opposing party shall have a right of written response within 7 days thereafter, limited to 4 pages. The applying party shall have a right of written reply within 5 days from service of the opposing party’s response, limited to 3 pages.
40. Upon the costs order nisi becoming absolute and failing agreement on the quantum of costs, D1 should lodge and serve a statement of costs within 7 days, and P should lodge a serve a list of objections (if any) within 7 days thereafter.
41. Finally, I thank both teams of counsel for their helpful assistance in this matter.
| | (Alexander Stock SC)
Deputy High Court Judge |
Mr Ambrose Ho, SC leading Mr Victor T.S. Lui instructed by Li & Partners for the Plaintiff
Ms Mairéad Rattigan, SC leading Ms Terri Ha instructed by Rita Ku & Ser for the 1st Defendant
[1] See also Decision §§5-10.
[2] Decision §6.
[3] Decision §9.
[4]Ko Hon Yue v Chiu Pik Yuk (2012) 15 HKCFAR 72 per Ma CJ at §§82-83; Yifung Properties Ltd v Smith [2019] 1 HKLRD 36 per Lam VP at §§16-18; Lo Kai Shui v HSBC International Trustee Ltd [2021] 5 HKC 337 per Wilson Chan J at §§110-117, 136, 158-160. See also summary in Decision §§22-25.
[5] Whether the action is an abuse of process as offending against the public interest in the finality of litigation should be judged broadly on the merits taking account of all the public and private interests involved and all the facts of the case.
[6]Total Lubricants Hong Kong Ltd v Christophe de la Cropte de Chanterac [2013] 2 HKLRD 838 per Kwan JA at §30.
[7]Cheng Ping Sum v Wong Chi Hang[2018] HKCFI 70per DHCJ Keith Yeung SC at §22.
[8]Yifung Developments v Liu Chi Keung Rich HCA 3020/2015, 29 August 2016, unreported, per G Lam J at §43.
[9]Lo Kai Shui (supra) at §§136 & 138. Privity can also be constituted where, given their commonality of interest, it may be an abuse of process for a party who has played an active role in certain proceedings and who could have sought to be joined to those proceedings, to commence another action against the defendant.
[10]Aldi Stores Ltd v WSP Group Plc [2008] 1 WLR 748 per Thomas LJ at §10.
[11] See: Decision §13; 2018 Judgment §9; Decision of Supreme Court of the State of New York by Justice Manuel J Mendez dated 15 July 2014 (in which the New York Court considered and rejected P’s argument that the 2013 Order should not be enforced on the basis that D1 and D2 had committed a fraud on the Hong Kong Court); Judgment of the Supreme Court of the State of New York dated 10 September 2015 on costs.
[12] 2018 Judgment §1. The Court also heard P’s summons for an order that he be allowed to provide an undertaking to pay ILB’s tuition and extra-curricular activities expenses directly; and D1’s summons for an education fund to be provided for ILB.
[13] Including: ILBs lifestyle; the Mother’s lack of supporting documentation; payments by Mr H; the whereabouts of an alleged sum of 13.7m; the Mother’s legal costs; various heads of expenses for ILB such as utilities, food, household, travel, helpers, tuition, medical/dental, entertainment, holidays, and clothing.
[14] Leading Ms Terri Ha.
[15] Leading Mr Victor TS Lui.
[16] It is no answer to say that the cases of action in the two claims are different, if they arise out of substantially the same facts: Lo Kai Shui (supra) at §160(2).
[17] Compare Decision §27.