Autoworld Trading (Fiji) Ltd v Dominion Insurance Ltd [2021] FJHC 166; HBC24.2020 (10 March 2021)

IN THE HIGH COURT OF FIJI AT SUVA
APPELLATE JURISDICTION

Civil Appeal No. 24 of 2020

BETWEEN: AUTOWORLD TRADING (FIJI) LIMITED a limited liability company having its registered office at Vatuwaqa, Suva, Fiji

APPELLANT/ORIGINAL DEFENDANT

AND DOMINION INSURANCE LIMITED a limited liability company having its registered office at 231 Waimanu Road, Suva, Fiji

FIRST RESPONDENT

AND VIJEETH SAAWAN SUBRAIL of Niu Street, Laucala Beach Estate, Nasinu, Fiji, Driver.

SECOND RESPONDENT

Counsel : Appellant: Mr. Shelvin Singh
: First Respondent: Mr. P. Sushil
: Second Respondent: Ms. M. Rakai
Date of Hearing : 5.3.2021
Date of Judgment : 10.3.2021

JUDGMENT

INTRODUCTION

1. This is an appeal from interlocutory decision of Resident Magistrate (RM), allowing an application to strike out Third Party Notice. This action was instituted by insurer , the Plaintiff- first Respondent (Plaintiff), for recovery of certain amount of money paid under insurance cover, based on misrepresentation of Defendant –Appellant (Defendant). Defendant had filed Third Party Notice against former employee Second Respondent (Third Party) who had allegedly misrepresented insurer. Third Party had not opposed to the Third Party Notice and was added to the action and had filed statement of defence. Third Party participated in Pre-Trial Conference. The cause of action was based on misrepresentation to Plaintiff on a claim under insurance policy. Subsequent to the action of Plaintiff. Defendant had instituted another civil action against third Party to recover a sum of money amounting $43,703.68 this claim did not include any loss due to misrepresentation an under insurance policy. The claim of Defendant against third party for $43,703.68 was dismissed and that resulted Third Party filing an application to strike out the Third Party Notice for abuse of process and or on res judicata. RM in his decision dated 6.1.2020 allowed the application for strike out of Third Party, on the basis of res judicata by estoppel. That action was instituted by the Defendant prior to present action based on misrepresentation of insurance claim for which the employer seeks to counterclaim from Third Party. The cause of action based on misrepresentation was not included in the dismissed action filed by Defendant. So the result in that cannot strike out of the claim based on misrepresentation. They are two distinct actions and claims were mutually exclusive from one another, though both had some common facts relating to a road accident. No issue of res judicata on estoppel is applicable for strike out Third Party Notice. One incident can give rise to separate actions and their outcomes are not always depended on each other. The economic reason for Defendant to await the outcome of one action was not determinative of success of a related matter or for application of res judicata. The cause of action in court below was not the road accident, but subsequent act of misrepresentation in a claim for insurance.

FACTS

2. Plaintiff (Plaintiff) in court below, Civil Action 137 of 2009 was seeking a return of $17,000 paid out pursuant to insurance policy between them, from Defendant on representation made in the insurance claim after a road accident.
   
3. Third Party was involved in the said road accident and had allegedly misrepresented Plaintiff in the process of providing information for the said insurance claim.
   
4. Third Party Notice was issued by Defendant, on the basis that misrepresentation was done by him while in employment. So Defendant claimed any liability from misrepresentation from third Party. So, the claim against third party in this action entirely rely on the success of Plaintiff’s action for misrepresentation in this action.
   
5. While this action was pending, Defendant instituted an action for a claim of $43,703.68 in Case No. 263 of 2010 against the Third Party. There was no evidence of statement of claim of the said action in court below, but perusing the judgment indicate following issues were to be determined in that case
   
   1. Whether the Defendant negligently and without due care as an employee of the Plaintiff delivered motor vehicle So SD Sharma Earthmoving Company without collecting the balance sum of $2,000?
   2. Whether the Defendant negligently and without any authority granted a rebate to one Siyad Shahim in the sum of $699.51?
   100. Whether the Defendant negligently whilst in employment of the Plaintiff caused damages and or accidents to the following vehicles which resulted in the loss to the Plaintiff-......Total $41,004.17
   4. Whether the Defendant’s undertaking dated 30.10.2006 was a valid acknowledgement of the losses suffered by the Plaintiff in respect of vehicles...
   5. Whether the Defendant is liable for the damages and losses of $43,703.38 by the Plaintiff for action
   6. Whether the Defendant is liable for interest on the judgment.
      
6. The above action which was instituted by the Defendant against third party, was dismissed 05.5.2017 after conclusion of evidence for both parties.
   
7. By Motion dated 26 .4. 2019, the Third Party applied for strike out of Third Party Notice on the basis of res judicata and abuse of process, based on the said decision handed down on 5.5.2017.
   
8. By Judgment delivered on 06 .01. 2020, RM dismissed the Third Party Notice with costs of $300.00 against Defendant on the basis of res judicata by estoppel.
   

ANALYSIS

9. The Defendant filed an appeal against that decision with the following Grounds of Appeal:

Grounds of Appeal

1. The Learned Magistrate erred in law and in fact in holding that the claim

raised by the Appellant in Civil Action No. 137 of 2009 had been determined in Civil Action No. 263 of 2010

2. The Learned Magistrate erred in law and in fact in determining the Appellant's claim No. 263 of 2010 involved the same vehicle DJ 664.
3. The Learned Magistrate erred in law and in fact in not considering the Appellant's submission that the issues in Action No. 137 of 2009 are vastly different from issues raised in Action No. 263 of 2010.
4. The Learned Magistrate erred in law and in fact for dismissing the Defendant's claim for restitution when there was evidence that the third party was the driver of the motor vehicle registration number DJ664.
5. The Learned Magistrate erred in law in determining Action No. 137 of 2009

without properly evaluating made by the Appellant but relied entirely on the decision of Action No. 263 of 2010.

10. Perusal of above five grounds of appeal indicate that there was only one ground of appeal and that was whether the RM had correctly applied principles relating res judicata by estoppel to strike out third party notice.
    
11. So, I will deal with only one appeal ground , and that is whether RM had correctly applied principles relating res judicata by estoppel when he applied six principles stated in Nagan Engineering (Fiji) Ltd v Raj [2010] FJHC 47; HBC106.2009 (18 February 2010) to the facts in action filed in court below.
    
12. Case No. 263 of 2010 had no issue whether the Defendant was entitled to indemnity for the misrepresentation of the second Defendant’s driving license status at the time of the accident. The cause of action was misrepresentation in an insurance claim for a road accident. This cause of action had arisen from a road accident, but the cause of action was not that accident but subsequent conduct of claimant under insurance policy.
    
13. Any party may seek to strike out third party proceeding in terms of Order 16 rule 6 of High Court Rules 1988. In the absence of any specific provision in the Magistrate Act or Magistrate Rules 1944 regarding Third Party Notice provisions contained in Order 16 of High Court Rules 1988 can be applied, in terms of Order 3 rule 8 of Magistrates Court Rules1944.
    
14. Such an application can be brought by way of motion at interlocutory stage in terms of Order 26 rule 1 of Magistrates Court Rules 1944.
    
15. Third Party’s application dated 26.4.2019 for strike out Third Party Notice were on following grounds
    
    1. Res judicata
    2. Abuse of process.
       
16. The above two grounds relied on the Defendant was held in affirmative in court below and they are inter related.
    
17. Though not relevant for this appeal for future reference, another ground where a party can be precluded from subsequent action is merger. This was not the ground for seeking strike out in the court below.
    
18. Clark and another v In Focus Asset Management & Tax Solutions Ltd (Financial Ombudsman Service intervening), [2014] 3 All ER 313[2014] 3 All ER 313
    

“Merger explains what happens to a cause of action when a court or tribunal gives judgment. If a court or tribunal gives judgment on a cause of action, it is extinguished. The claimant, if successful, is then able to enforce the judgment, but only the judgment. The effect of merger is that a claimant cannot bring a second set of proceedings to enforce his cause of action even if the first tribunal awarded him less than he was entitled to (see, for example, Wright v London General Omnibus Co [1877] UKLawRpKQB 51; (1877) 2 QBD 271, [1874–80] All ER Rep Ext 1721 and The Indian Endurance (No 2), Republic of India v India Steamship Co Ltd [1997] UKHL 40; [1997] 4 All ER 380, [1998] AC 878). As Mummery LJ held in Fraser v HLMAD Ltd

[2006] EWCA Civ 738 at [29], [2006] EWCA Civ 738; [2007] 1 All ER 383 at [29], a single cause of action cannot be split into two causes of action.”(emphasis added)

19. So even under ‘merger’ what is determinative is the cause of action. A party is not allowed to split cause of action but at the same time when third party notice is issued Defendant cannot control proceedings of the Plaintiff and limited by the claim of Plaintiff and Third Party claim cannot be expanded to include all causes of action, against third party.
    
20. The Indian Endurance; Republic of India and others v India Steamship Co Ltd, [1993] 1 All ER 998[1993] 1 All ER 998 UK Supreme Court held,
    

There is a wider sense in which the doctrine [of 160;judicata] may beay 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.' (See Yat Tung Iment Co Ltdo Ltd v Dao Heng Bank Ltd [1975] UKPC 6; [1975] AC 581 60;590 per Lord Kilbrailbrandon, citing the locus clas of Hendev Henderson< (1843) e 100 at 115, [160;[1843&#821&#80] All ERll ER Rep 378 at 382Wig/p>

There is one observation which I wh I wish to make upon the passage from them the judgment of Diplock LJ which I have just d. Th thatprincipinciple of merger to which Diplock LJ refe refers asrs as applying where the cause of action was determined to exist, in the sense that judgment was given upon it, cannot be described simply as a species of estoppel. The principle, which is sometimes called the doctrine of merger in judgment, is that a person—

‘in whose favour an English judicial tribunal of competent jurisdiction has pronounced a final judgment ... is precluded from afterwards recovering before any English tribunal a second judgment for the same civil relief on the same cause of action ...'

(See Sp Bower and Turner on t on the Doctrine of Res Judicata (2n, edn, 1969) p 355, para para 423.)

21. Even on n on ‘merger’ Third Party Notice cannot be struck out in court below as Third Party Claim was depended on success of Plaintiff’s claim.

Res judicata

22. Clark and another v In Focus Asset Management & Tax Solutions Ltd (Financial Ombudsman Service intervening), [2014] 3 All ER 313[2014] 3 All ER 313 UK Court of Appeal held,
    

“Res judicata principally means that a court or tribunal has already adjudicated on the matter and precludes a party from bringing another set of proceedings (see generally Lemas v Williams [2013] EWCA Civ 1433, [2013] All ER (D) 160 (Nov)). The doctrine also covers abuse by a litigant of the court's process by bringing a second set of proceedings to pursue new claims which the claimant ought to have brought in the first set of proceedings (this is known as the rule in Henderson v Henderson [1843] EngR 917; (1843) 3 Hare 100, (1843) 67 ER 313).

[7] The requirements of res judicata are different from those of merger. All that is necessary to bring merger into operation is that there should be a judgment on a cause of action. Res judicata may apply either because an issue has already been decided or because a cause of action has already been decided. We are concerned on this appeal with res judicata of the latter kind, known as cause of action estoppel.” (emphasis added)

23. There was no determination of the issue of misrepresentation and whether Third Party can be liable to indemnify the said claim in the action already concluded.
    
24. There was neither a determination of an ‘issue’ in the court below nor the ‘cause of action’ in the previous action.
    
25. Civil Action where RM delivered decision on 6.1.2020 dismissing Third Party Notice, was instituted by insurers against Defendant, prior to Civil Action 263 of 2010.
    
26. The claim for third party which was struck off by RM, was contingent on the Plaintiff‘s success on the claim of misrepresentation in an insurance claim. The claim against the third party is contingent upon Plaintiff’s success and if that fails there was no claim left for Defendant against third party.
    
27. As such there cannot be independent caused of actin arising for Defendant to claim against third Party , hence the issue of res judicata has no application to this case due to dismissal of civil action No 263.
    
28. Clark and another v In Focus Asset Management & Tax Solutions Ltd (Financial Ombudsman Service intervening) held, [2014] 3 All ER 313[2014] 3 All ER 313
    

“[11] Thera powerful twofold rati rationale for the doctrines of merger and res judicata. The firstonalionale is 'the pubnterest in finality of litigation rather than the achievement of justice as between the inde individual litigants' (see The I Endu, Rep of IndiaIndia v India Steamship Co Ltd& #160;[1993] 1 A 998 at60;at 1002, [1993] A at<p160;per Lord Goff ooff of Chieveley). Mr Clive Wolman, for the respondents, suggests that the the public interest in finality arises oua conthat ublic courd tribunals should not be cloe clogged gged by reby repetitpetitious re-hearings and r-determinations of the the same disputes. This is clearly a powerful consideration.

[12] Second there is the privnte interest. As Sir Ns Broilkinson V-C put it in Arnold v Nal onal WestmWestmWestminster Bank plc [1983] 3 All ER 977&#1&#160 982: 'itnjust for a maneto be vexed twice with litigation on the sahe same subject matter.” (emphasis is mine)

29. The rationale for for res judicata cannot be applied to Third Party Notice in court below as it was not an action instituted by Defendant, and claim against third party was contingent on proof of claim by Plaintiff. It was not possible to include a claim for misrepresentation in a separate action, while the action filed by Plaintiff in court below was pending.
    
30. Though I, fully appreciate the plight of third party who had to defend two different actions, for the reasons given above third party notice in court below, cannot be struck off. RM had considered and applied six widely accepted elements to determine cause of action estoppel or res judicata by estoppel.
    
31. Clark and another v In Focus Asset Management & Tax Solutions Ltd (Financial Ombudsman Service intervening), [2014] 3 All ER 313 at 317-318 held,

“ I take as the requirements of cause of action estoppel the summary from Spencer Bower and Handley Res Judicata (4th edn, 2009) cited with approval by Lord Clarke (with whom Lord Phillips P, Lord Rodger, Lord Collins and Lord Dyson agreed) in the recent case of R (on the application of Coke-Wallis) v Institute of Chartered Accountants in England and Wales [2011] UKSC 1 at [34], [2011] UKSC 1; [2011] 2 All ER 1 at [34], [2011] UKSC 1; [2011] 2 AC 146:

'In para 1.02 Spencer Bower and Handley makes it clear that there are a number of constituent elements in a case based on cause of action estoppel. They are that: “(i) the decision, whether domestic or foreign, was judicial in the relevant sense; (ii) it was in fact pronounced; (iii) the tribunal had jurisdiction over the parties and the subject matter; (iv) the decision was—(a) final; (b) on the merits; (v) it determined a question raised in the later litigation; and (vi) the parties are the same or their privies, or the earlier decision was in rem.”

[9] If the requirements of res judicata are fulfilled, they constitute an absolute bar and the court has no discretion to hold that res judicata should not apply in any particular case.’

32. The most important issue (v) above, of the elements to determine res judicata was determined by RM by reference to vehicle number, which was wrong. The claim for Plaintiff was misrepresentation, and issue of liability of third party in the alleged claim. This was never claimed in subsequent action which concluded.
    
33. The decision handed down by RM on 6.1.2020 is set aside. The result of that is that third party notice is reinstated. The cost of this appeal is summarily assessed at $1000 to be paid by third party (second Respondent) to the Plaintiff (Appellant).
    

FINAL ORDERS

1. Learned Magistrate’s decision handed down on 6.1.2021 is set aside fully.
2. Third Party Notice is reinstated.

100. Appeal is allowed.

4. Cost of this appeal is summarily assessed at $1,000 to be paid by third Party (second Respondent) to Defendant (Appellant).
   

Dated at Suva this 10^th day of March, 2021.

.....................................

Justice Deepthi Amaratunga

High Court, Suva