GIRVAN LTD v. TRADEPOWER (HONG KONG) LTD

HCA 453/2010

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

ACTION NO. 453 OF 2010

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D E C I S I O N

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Introduction

1.  This decision deals with:-

(a)     the application taken out on 29 July 2010 by the defendant (“Tradepower”) seeking this action to be dismissed or struck out.  It was returnable on 9 September 2010;

(b)    the application taken out on 2 September 2010 by the plaintiff (“Girvan”) seeking the time limit for filing and service of the statement of claim to be extended.  It was returnable also on 9 September 2010.

Background

2.  The background leading to these applications can be summarised as follows.

3.  Girvan and Tradepower used to be related companies; they (together with a third company) used to be beneficially owned and controlled by the same two individuals: see Tradepower (Holdings) Ltd. v. Tradepower (HK) Ltd. (2009) 12 HKCFAR 417, para. 7; CACV 101/2008 (5 November 2008), para. 5 (“the liquidators’ claim”).

4.  In November 2008, Girvan commenced HCA 2288/2008 against Tradepower (“the 2008 action”).  The contents of the general indorsement of the 2008 action were exactly the same as those of the general indorsement herein; in short, Girvan claims that Tradepower holds several real property units and carparking spaces (“the suit properties”) on trust for Girvan.  The claim is premised on the parties’ common intention and Girvan’s payment of the purchase price (resulting in Tradepower being indebted to Girvan).

5.  Further to commencing the 2008 action, Girvan caused the writ therein to be registered as a lis pendens against the suit property.

6.  Despite issuing and registering the writ in the 2008 action, Girvan did not serve it and the validity of the writ expired at the end of the 12-month period (RHC Ord. 6 r. 8(1)).  According to an affidavit filed herein for Girvan, the 2008 action:-

“...is however an action that ultimately [Girvan] decided not to pursue, where the Writ was never served and so the Court was never seized of the action” (para. 11 thereof).

No explanation was given as to why the 2008 action was not pursued.

7.  Instead of applying to renew the writ of the 2008 action (see Hong Kong Civil Procedure 2010, Vol. 1, para. 6/8/3 for the principles governing renewal), Girvan commenced this action in March 2010.

8.  At one stage, Tradepower commenced an action (HCMP 232/2010) seeking (among other things) to vacate the registration of the writ of the 2008 action (“the Tradepower proceeding”).  This action was commenced while the Tradepower proceeding was pending.

9.  Without going into the details of the Tradepower proceeding, an order was made on 22 June 2010 directing inter alia that, unless Girvan serves the writ herein on Tradepower by 4:00pm on 12 July 2010, the said writ be struck out and be vacated from being registered as a lis pendens (leave was also given to Tradepower to discontinue the Tradepower proceeding).

10.  The reasons for the 22 June 2010 order were given in the reasons for decision handed down on 28 June 2010.  In brief, Girvan was found to be bordering on abusing the court process on the ground that the 2008 action and this action should not be looked at separately. Girvan should not be allowed to be dilatory in the service of the writ herein (or the general progress of this action).  It was also warned that the dismissal of this action “may well be justified if it is established that Girvan continues to conduct [this action] in an abusive manner” (see para. 13, 14 and 16 thereof).

11.  Girvan only served the writ herein on the deadline date imposed on 22 June 2010.  But it did not file or serve a statement of claim within the period prescribed by Ord. 18 r. 1.  In fact, nothing was done towards that end until after Tradepower took out an application returnable on 9 September 2010 (see para. 1(a) and (b) above).

Dismissal Application

12.  Tradepower’s application for this action to be dismissed is based essentially on:-

(1)    Girvan’s delay in filing and serving the statement of claim;

(2)    the said delay should be considered in the light of the history summarised under the heading “Background” above;

(3)    it can be inferred from sub-para. (1) and (2) above Girvan is guilty of abuse of process and/or want of prosecution because there is no intention of pursuing this action to trial.

13.  Girvan denies the contention summarised in para. 12(3) above.  First, Girvan insists that it has not abused the court process and it intends to pursue this action to trial.

14.  Secondly, in relation to the delay (para. 12(1) above), Girvan argues that it was only as short as 5 days (28 to 31 July (4 days) and 1 September 2010).  The argument is based on Ord. 3 r. 3 (summer vacation excluded from time for service, etc. of pleadings).  I disagree with this argument and agree with Tradepower that the said provision is only applicable to “any period prescribed by these rules or by any order or direction for [service]”.  By definition, any time period after the prescribed period has expired cannot be part of the last-mentioned period.

15.  The delay in filing and serving a statement of claim herein therefore lasted from 28 July to 2 September 2010 at the earliest (a period of slightly over a month).

16.  Further, as Girvan correctly accepts, the period of delay before 22 June 2010 (but after the issuance of the writ in the 2008 action) can be taken into account: para. 9, Girvan skeleton submissions (and Hong Kong Civil Procedure 2010, Vol. 1, para. 25/L/5).  Having considered Girvan’s affidavit (quoted in para. 6 above), that period should last from around mid-November 2008 to around mid-July 2010 (when the writ herein was finally served) (a period of about 1 year and 8 months).

17.  But because Girvan’s claim is not barred by the Limitation Ordinance (Cap. 347), the discretion to dismiss it should be sparingly exercised unless there is contumelious default: Hong Kong Civil Procedure 2010, Vol. 1, para. 25/L/8 and 25/L/9.

18.  I agree with Tradepower there are materials for inferring that Girvan’s default was contumelious:-

(a)     as stated above, the 2008 action was “abandoned” without explanation;

(b)    Girvan asserts that Tradepower has not adduced sufficient evidence concerning the lack of intention to pursue the claim.  It seeks to justify the delay by (i) the need to wait for the liquidators’ claim to end and (ii) the settlement discussions between the parties.  But I do not find them (whether singularly or cumulatively) to be valid justifications;

(c)    the affidavit filed on Girvan’s behalf was not deposed to by its responsible officers, but by its solicitors.  In fact, the deponent does not even appear to be the solicitor having conduct of this action.  He described himself as “[working] on the present proceeding under the supervision of Jason Toms, a partner ... who has conduct of this matter” (para. 2 thereof) (cp. Ord. 41 r. 5(1) and Hong Kong Civil Procedure 2010, Vol. 1, para. 41/5/4 (“An affidavit should where possible be sworn by the person with the most direct knowledge of the matters deposed to.  This will usually be the party rather than his solicitor”)).

19.  Girvan explains that its affidavit was not made by its officers because the directors are of advanced age and frequently absent from Hong Kong.  However, this explanation cannot be sustained in view of the available means of international communications nowadays.

20.  Having concluded Girvan has been guilty of contumelious delay, it is strictly unnecessary to consider the merits of Girvan’s claim.  I shall do so for completeness.

21.  The assertion that Tradepower became indebted to Girvan (as a result of Girvan’s mortgage payments) has been doubted by the Court of Final Appeal and the Court of Appeal in the liquidators’ claim ((2009) 12 HKCFAR 417, para. 14, 27 and 139; CACV 101/2008, para. 16 to 20).

22.  Girvan’s affidavit asserts that:-

“Insofar as there may be a question ... that [Girvan] may at some point in time have been indebted to [Tradepower] when the mortgage repayments were made, suffice it to say that the debt was cleared as at 31 December 1999 and [Girvan] was not indebted to [Tradepower] from January 2000 onwards. ... A copy of the Report and Financial Statements of [Tradepower] dated 31 March 2000 is at pages 3-14 of ‘LWC-1’.

From January 2000 ... up until the complete discharge of the mortgage in January 2004, [Girvan] has paid a total sum of US$938,301.85 ... ” (para. 23 and 24 thereof).

23.  As observed above, the deponent is not Girvan’s officer and his source of information and belief has not been disclosed. Little weight should therefore be given to the above assertions.  The financial report he referred to shows it to be for the year ending 31 December 1999. There is an item “Amount due from related company” showing a debt owed by Girvan of about HK$26.4 million as at 1 January 1999; this was said to have been fully paid off by 31 December 1999.  However, no details of payment have been shown.

Time Summons

24.  Girvan fairly accepts the two applications involve substantially the same considerations.

25.  For the avoidance of doubt, the matters set out under the heading “Dismissal Application” have also been considered in the context of Girvan's “time” summons.

Conclusion

26.  To conclude, by reason of the matters set out above:-

(1)    this action is dismissed;

(2)    Girvan's “time” summons is also dismissed.

Costs Order Nisi

27.  There is no apparent reason to depart from the usual rule that costs should follow the event.  There will accordingly be a costs order nisi pursuant to Ord 42 r. 5B(6) that the costs of this action and the two applications (including any reserved costs) be paid by Girvan to Tradepower, to be taxed if not agreed.