XCHRX KWOK CHUNG FAI ANDY v. CITYBUS LTD. AND ANOTHER

HCPI 739/1999

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

PERSONAL INJURIES ACTION NO. 739 OF 1999

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D E C I S I O N

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1. This is an appeal from a decision of Mr Registrar Chan, given on 24 September 2001, when he dismissed the application of the defendants to discharge the order of Master Wong, made ex parte on 26 March 2001, extending the validity of the amended writ of summons herein for a period of three months.

2. These proceedings arise out of a road traffic accident which occurred on 11 July 1996 when the plaintiff was a passenger in the 1st defendant's bus, driven by the 2nd defendant, which, it is pleaded, left the road and struck a slope at the side of the road. The 2nd defendant later pleaded guilty to, and was convicted of, careless driving. The plaintiff sustained personal injuries in the accident. For reasons which have not been explained and in respect of which there is no evidence, the plaintiff's present solicitors were not instructed to take proceedings in this matter until 6 July 1999, a few days before the expiry of the limitation period, whereupon they swiftly issued a generally endorsed writ on 8 July, with a minor amendment as to the plaintiff's name on 10 July. On 12 July 1999 they wrote to the defendants' insurer giving them notice of the claim pursuant to s. 10(2)(a) of the Motor Vehicles Insurance (Third Party Risks) Ordinance, Cap. 272. At this stage the plaintiff's solicitors had no documentation in respect of the plaintiff's injuries or income with which to quantify his claim.

3. On 15 July 1999 a Mr Nathaniel Ng of the defendants' insurers, on the suggestion of his superior officer, telephoned Mr Li of the plaintiff's solicitors to ask him to let them have a quantification of their claim, and the solicitor's attendance note (dated 14 July, probably in error) records:

"Guardian notify us not to serve for the time being and requested us to quantify our client's claim."

A letter dated the same day was sent by the insurers marked "without prejudice" the relevant part of which reads as follows:

"As discussed with your Mr Lee, we understand that the Writ of the above proceedings has not been served. In an attempt to reach an out of court settlement amicably, please consider if you would agree to suspend the above proceedings and to quantify your client's claim together with all documentary evidence for our consideration."

The plaintiff's solicitor did not reply to this letter, or contact the insurer again, until they wrote to them on 4 October 2000 with a quantification of the claim. On ascertaining that the writ had not been served, the insurers declined to consider the case further as it was now outside the limitation period.

4. Meanwhile, the writ not having been served, it expired in July 2000, but no application was made to extend its validity until March 2001, when the order in question here was made.

5. The plaintiff's case as to the failure to renew the writ upon its expiry is that the letter of 15 July 1999 from the insurer referred to above, and their own subsequent conduct, amounted to an agreement that the action should be suspended until they were in a position to quantify their client's claim, and negotiate a settlement, and that this was a good reason to justify taking no action, and for a late application to be granted. Mr Li, the solicitor, also sets out the sequence of events which included obtaining medical reports, which was completed by the end of December 1999. Meanwhile, in late November 1999, he sought an adjournment of the Check List Review which was fixed for 31 January 2000, giving as his reason that he was not yet able to prepare a statement of claim and statement of damages. The Check List was adjourned to a date to be fixed in February 2000, but was not restored by the plaintiff's solicitor until May 2001, for a hearing in September 2001, when it was further adjourned, presumably to await the outcome of this appeal.

6. Mr Li also sets out in his affidavits further reasons why the matter was not proceeded with after December 1999. He says that an assistant solicitor, Miss Chan, took up the case in February 2000, but left in April 2000. There is no explanation as to why nothing appears to have been done during this period, nor in the two months before she took over. Another solicitor replaced Miss Chan in May 2000, but only stayed a week. Yet another solicitor, Miss Au was employed in June 2000 and took up the case, but left in September 2000, and another, Miss Kong took over in October 2000, and then it was discovered that the quantification requested by the insurer in July 1999 had never been supplied. He says that he believes that the reason no attempt to renew the writ had been made was that they had been led to believe that there would not be any requirement to serve the writ.

7. After the insurers refused to consider the matter further in October 2000, the plaintiff's solicitors first sought advice from counsel, and then referred the case to the Solicitors Indemnity Fund, and it was in consultation with them that the application to extend the validity of the writ was finally made on 23 March 2001.

8. There is a lengthy note in Hong Kong Civil Procedure 2001 regarding the principles to which the court should have regard when exercising its discretion whether or not to grant an application to renew a writ, and setting out examples of what amounts to good reason for it. Mr Kerr for the defendants has submitted that there should be a two stage process: first to ascertain whether a good reason exists, and then whether, in the light of that, the court should exercise its discretion in favour of the applicant, taking into account all the circumstances of the case. In support of this he referred me to the judgment of Bokhary J A in Chow Ching Man and ors v. Sun Wah Ornament Manufactory Ltd and ors [1996] 2 HKLR 338, where, at page 341, following the decisions of the House of Lords in Kleinwort Benson Ltd. v. Barbrak Ltd [1987] AC 597, Waddon v. Whitecroft Scovill Ltd. [1988] 1 WLR 309, and Baly v. Barrett [1988] NI 368, he said that:

".....the discretion to extend the validity of a writ does not arise unless the plaintiff first establishes matters amounting to good reason for extension or at least capable of so amounting;"

9. The only reason put forward here by the plaintiff, or what I find can be described as a reason, is the "agreement" alleged to have been made arising out of the letter from the insurers of 15 July 1999. Mr Li, in his affidavits, has gone into what he clearly considers reasons why nothing was done in this matter from December 1999, to October 2000. But these are, in my view, explanations, not reasons, or possibly even excuses. There can be no denying that this case, whether because of changes of staff or otherwise, was overlooked by the solicitors and allowed to go to sleep until a sharper eyed assistant took it up and realised they had a problem. There is no possible good reason why, following receipt of the medical report in December 1999, and having had ample time to take instructions from the plaintiff as to his financial loss and his earnings, of which, as a government servant, there would be readily available documentary evidence, no step was taken to quantify the claim until October 2000, nor to either apply to renew the writ before July 2000, or approach the defendants' insurers again to ensure that time was not a problem.

10. This is a case where, not only has the writ been allowed to expire, but the limitation period has also done so. It is incumbent upon the plaintiff, not only to show a good reason for its renewal, but give a satisfactory explanation for his failure to apply for renewal prior to its expiry. Mr Ng, for the plaintiff, puts forward the "agreement" as the reason for the writ to be renewed. He says that the letter of 15 July is an offer to the plaintiff to suspend the proceedings pending quantification of the plaintiff's claim, which offer was accepted by the plaintiff by not serving the writ. Alternatively, it is his case that the plaintiff was induced not to serve the writ by the attitude of the defendants' insurers.

11. I am prepared, for the purposes of this application, to find that the wording of that letter is capable of being an offer to the plaintiff to refrain for taking further steps in the proceedings, for a time, which I shall return to, but I have to say immediately that I have difficulty with the concept of acceptance of that offer being communicated by silence, and apparent inactivity. However, having indicated to the plaintiff's solicitors that they would be agreeable to the proceedings being suspended from further action, and seeing that no further action was taken, there must at least be an understanding that no point would be taken if formal proceedings were not pursued immediately, and it is at least arguable that, had the defendants opposed an application to renew within the period of validity of the writ, estoppel would arise. This was after all a situation where, if any agreement or understanding existed, it was for the parties to have breathing space, for the plaintiff to prepare his case and quantify his claim, and the defendants meanwhile to avoid incurring legal costs. To include in that an agreement that the plaintiff may allow both the limitation period and the writ to expire without risk to himself would need wording very much clearer than this, and a clear indication that both parties understood that to be the case.

12. I therefore also have to look at what the parties would have considered, had their minds been directed to it, to be the time for which the proceedings would remain on hold. It cannot be the case that the defendants wished or intended an indefinite stay, while at the same time allowing the plaintiff to keep all his options open and not to have to concern himself with validity of the writ nor the limitation period. While it is to the obvious benefit of an insurer to defer payment on a claim, and this is a case where it is unlikely that liability would have been a serious issue, they are also entitled to some certainty in their dealings. Any such understanding to defer proceedings can only be, in my view, and in the absence of clear agreement to the contrary, for a reasonable time. Such would be certainly not beyond the period of validity of the writ, namely to July 2000, one year later. I would go further, and say that, had the understanding evidenced by the letter been the real reason for the inactivity after December 1999, I have no doubt that the plaintiff's solicitors would also have considered the length of time for which it was to continue, bearing in mind the expiry of the limitation period and impending expiry of the writ, and ensured that they were not prejudicing the plaintiff by allowing those periods to expire. In the event, it was only after the insurers disclaimed liability in October 2000 that they referred back to the letter.

13. In the circumstances, I am not satisfied that there was a clear agreement here for a suspension, but at most an understanding that no action need be taken for a reasonable time, which I find to be not beyond the year's validity of the writ, and certainly was not an agreement not to object to the renewal of the validity of the writ.

14. From the number of cases which have been cited to me by counsel, it is clear that, for an agreement to be a good reason, it must be a clear agreement, and I take that to mean not only that it is clear that there is an agreement, but that its terms are clear. Had this application been made before the expiry of the writ in July 2000, I have no doubt that the plaintiff could have relied on the letter and the understanding, and that the court would have exercised its discretion in favour of the plaintiff. Beyond that period, the letter falls far short of a good reason as, having allowed the writ to expire, and a further period of some eight months to pass before making this application, he now has the added difficulty of providing a satisfactory explanation of such delay, which is not provided by the letter.

15. As I have already found, the delay from December 1999 to July 2000 has not been satisfactorily explained except as an oversight, which may well be the result of staff changes, but cannot wholly be as a result of them, and there is more than a suggestion here of carelessness. The further delay from July to October 2000 is similarly inadequately explained. The additional period to March 2001 Mr Li seeks to explain by reference to his putting the matter before the Solicitors Indemnity Fund. Having accepted that he may have a problem such that they needed to be involved, I find it totally inexplicable that he allowed the situation to become worse by not acting swiftly to make this application, and that no good explanation has been put forward.

16. Mr Ng has referred to two cases where the court remarked obiter that there may be a good reason where the defendant had brought about the delay by asking the plaintiff to withhold service for some reason - Battersby v. Anglo-American Oil Co. Ltd [1945] 1 KB 23 - or there was an agreement, express or implied to defer service of the writ, or delay induced or contributed to by the defendant - Heaven v. Road and Rail Wagons Ltd [1965] 2 QB 355 - but for the reasons above, I find that this case is easily distinguishable on the facts. Similarly in North v. Kirk (1967) 111 S.J. 793, and Re Chittenden (deceased) [1970] 3 All ER 562, there was a clear agreement that while negotiations were ongoing, as they were, the writ need not be served, and in the former there was delay of only one month before it was renewed. Negotiations themselves cannot, of course, be a good reason for renewal, but ongoing negotiations can be evidence of the defendant being a party to an agreement that the writ need not be served or renewed while those negotiations are proceeding. As Glidewell LJ said in The "Mouna" [1991] 2 Lloyds LR 221, at page 229:

"For my part, I am not absolutely certain what "being a party to the delay" in circumstances in which there is no inference that the defendant agreed to the delay means. The fact of negotiations in themselves is not a good reason, the authorities show. In my view, if by words or conduct a defendant has led the plaintiff to believe that the defendant consents to an extension of validity of the writ, or will do so, that may well be a ground for inferring an agreement to that effect. But in the absence of such an agreement or, of course, of fraud, then something less is, in my judgment, not enough. If that means that the second part of the dictum of Mr Justice Brandon in The Owenbawn was incorrect in law then I would so hold.

That of itself if really enough to deal with this appeal. But Mr Sussex argues thirdly that quite apart from that, the Judge's conclusion that there can be spelt out of the correspondence acquiescence by the defendants in the plaintiffs not serving the writ in time and being granted an extension of time for the validity of the writ is not made out. He urges us to the view that the correspondence initially merely said --

Let us negotiate for the time being; we suggest you in effect do not serve your writ at the moment.

But nowhere in the correspondence is there to be found and from no part of the correspondence can there be spelt out anything in the nature of a representation by the defendants, P and I club, or their solicitors that when the time came for the writ to expire they would agree to it being extended or that they would be party to it being extended.

With that submission I also agree. With the greatest respect to Mr Justice Sheen, I cannot read anything more into the correspondence that that the defendants' representatives were content to negotiate, and if while they negotiated time slipped by and the plaintiffs' solicitors did nothing about it, it was not their, the defendants', representatives' responsibility to remind them of the fact. In other words, if the plaintiffs' solicitors were misled, I think it was because they misled themselves."

17. The facts of that case can be compared to those here, save that no negotiations were even commenced in this case, and the solicitors allowed time to slip by while nothing at all was done.

18. It follows that I do not find there was a clear agreement that the writ need not be served, and certainly not that the plaintiff need not apply for renewal of it. Whatever understanding there was arising out of the letter of 15 July cannot therefore be a good reason for granting an extension. Neither am I satisfied that there is a good explanation for the delay in applying once the writ had been allowed to expire. I am therefore of the view that there are no good grounds on which an application under Order 6, rule 8(2) should be granted, nor that my discretion should be exercised in favour of the plaintiff, who, by his solicitors, is the author of his own misfortune. I will allow this appeal and dismiss the plaintiff's application with an order nisi for costs to the defendants both here and before the Registrar.