Kerry Foodstuffs Co. Ltd. v. Phulsawat Navy Co. Ltd. and Others

CACV 262/1998

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF APPEAL

CIVIL APPEAL NO. 262 OF 1998

(ON APPEAL FROM HCCL 1 of 1992)

----------------------

J U D G M E N T

----------------------

Godfrey, J.A. (delivering the first judgment at the invitation of Mortimer, V-P) :

Introduction

1. This is an appeal from the refusal of His Honour Judge A. Chung (sitting as a deputy judge of the Court of First Instance of the High Court) on 28 September 1998 to strike out the action before him for want of prosecution. That is an action in which the plaintiff claims to have been the owner of some 3,000 metric tons of Thai sugar shipped to Sri Lanka in 1991. There are three defendants, the 1st defendant being the owner of the vessel in which the sugar had been shipped. The other two defendants carried on business in Colombo, Sri Lanka; the 2nd defendant was the party to whom the 1st defendant delivered the sugar, and the 3rd defendant the party which acted as the 1st defendant's shipping agent.

2. The plaintiff claims that the sugar was "misdelivered" to the 2nd defendant, and the issue in the action is whether or not the plaintiff is entitled to damages against all or any of the defendants for conversion of the sugar.

The history of the action

3. The action was launched as long ago as 3 January 1992. Since then, say the defendants, the plaintiff has been guilty of inordinate and inexcusable delay in prosecuting the action. However, the 2nd and the 3rd defendants have not appealed against the judge's decision to refuse their application to dismiss the plaintiff's action against them for want of prosecution. But the 1st defendant has done so and it is the 1st defendant's appeal with which we are now concerned. The 1st defendant claims that the judge fell into error in deciding not to strike out the plaintiff's action as against the 1st defendant. This, says the 1st defendant, was an exercise of discretion which this court is entitled to review.

4. The story (as summarised by the judge) shows that the action proceeded in a very desultory way. The pleadings were closed early in 1993; discovery took place not long afterwards. There was a disgraceful delay between 1995 and 1997, on the 1st defendant's view of the matter, a delay of some 34 months; on the plaintiff's view, a delay of some 22 months. Either is more than long enough.

5. The case for the plaintiff needed to be supported (or so the plaintiff was apparently advised) by expert evidence. That expert evidence was available by the end of 1995. The collation of the rest of the plaintiff's evidence does not seem to have been a particularly complex exercise. There were only 4 witnesses who the plaintiff wished to call, all of whom were associated with its own business. Orders about evidence were made prescribing times for the disclosure of the expert evidence and exchange of witness statements. Still, the action rumbled on.

6. Time after time (according to the judge, some 10 times) joint applications were made by the plaintiff and the defendants (at the instance of the plaintiff) for extensions of time. Time and again, the defendants were told by the plaintiff that the application was, this time, final. Time after time, that proved to be a triumph of hope over experience. Each time, the extension sought was for a short period. But, cumulatively, these extensions led to a very considerable delay. In the end, the 1st defendant suffered prejudice as a result of all this, because the other defendants, who might have contributed to any damages that had to be paid to the plaintiff, ran into financial difficulties. Further difficulties for the 1st defendant arose after 1997 over the question of the enforceability of Hong Kong judgments in Sri Lanka.

The judge's decision

7. The judge, having reviewed the history of the action, came to the conclusion that the delay had been inordinate.

8. The judge went on to consider whether or not the defendant's conduct had been such as to render it unjust to strike out the plaintiff's action for want of prosecution. He referred to correspondence the 1st defendant had had with the plaintiff concerning a bank guarantee which was to be provided by the 1st defendant. This correspondence went on for years, there being annual renewals of this guarantee. He referred to some sporadic settlement discussions the plaintiff had had with the defendants, taking place, first, as long ago as 1991, before the action was brought, and later in 1995-1996. So far as the 1st defendant was concerned, he referred to the series of some 10 consent orders mentioned above relating to extensions of time for the disclosure of expert evidence and the exchange of witness statements. He referred to some other matters, concerning the 2nd and 3rd defendants only, relating to positive steps which they had taken in the action. He said :-

".... I agree with the Plaintiff's submissions that the Defendants' conduct in this case fell within the category '... the defendants have for [considerable periods of time] continued with the action thereby [led] the plaintiff to incur substantial legal costs ...'"

(The citation is from the speech of Lord Browne-Wilkinson in Roebuck v. Mungovin [1994] 2 A.C., at pp.236, 237.) The judge said that :-

"The legal costs so incurred would include preparing the witness statements, expert report, discovery of documents of both sides, and filing and serving various documents including further and better particulars."

He based his conclusion not to strike out the action on what he called "condonation and acquiescence" by the 1st defendant. In those circumstances, he held that the delay was "not inexcusable".

The case for the 1st defendant

9. The 1st defendant submits that the judge ought not to have taken into account the matters of the bank guarantee, and the settlement discussions. These were irrelevant to the question which he had to consider. The 1st defendant further submits that the judge seems to have linked the conduct of the 2nd and 3rd defendants, in taking certain positive steps in the action, with the conduct of the 1st defendant, which had not done so; its contribution had been limited to consenting to the orders to which I have already referred. The 1st defendant submits that in these circumstances, the judge fell into error in exercising his discretion in the matter so as to allow the plaintiff to continue with its action.

10. Accordingly, says the 1st defendant, we ought to set aside the judge's order and review the matter for ourselves. On that footing, the 1st defendant says, we should conclude that this is a case where the delay was not only inordinate but also inexcusable and the plaintiff's action ought to be struck out accordingly.

The law

11. The law is clear but perhaps this case warrants a short restatement.

12. The approach of the court to cases of this sort, what I might call the "modern approach", is to the effect that the discretionary power of the court to dismiss an action for want of prosecution should be exercised only where the plaintiff's default has been intentional and contumelious or where there has been inordinate and inexcusable delay on his or his lawyer's part giving rise to a substantial risk that a fair trial would not be possible or to serious prejudice to the defendant; see Allen v. Sir Alfred McAlpine & Sons Ltd [1968] 2 Q.B. 229, approved by the House of Lords in Birkett v. James [1978] A.C. 297. As the latter case demonstrates, in an interlocutory matter, an appellate court should regard its functions as primarily a reviewing function, and should reverse the judge's decision only when it is satisfied that he has erred in principle by giving weight to something which he ought not to have taken into account or by failing to give weight to something which ought to have taken into account, or in order to promote consistency in the exercise of their discretion by the judges.

13. In Tsangaris and Another v. Tzortzis and Others, reported in "The Times" on 17 February 1976, the Court of Appeal indicated that appeals from decisions of judges on summonses to strike out for want of prosecution should be discouraged. Cairns, L.J. said that :-

"such appeals took up far too much of the time of the court. When a judge had declined to strike out and an application for leave to appeal was refused applications to the Court of Appeal for leave to appeal only meant that unnecessary costs would be incurred and, very often, the hearing of the action would be further postponed. The matter was one of discretion, of common sense."

14. We do not here of course have any system for applications for leave to appeal, but, in my judgment, appeals from a judge who has refused to strike out an action for want of prosecution do need to be discouraged, and distinguished from appeals from a judge who has decided that such an order should be made. Where a judge has, in effect, done no more than conclude that in the interests of justice, the plaintiff's action should be allowed to continue, where he refuses, in other words, to drive the plaintiff from the judgment seat, it takes a very strong case to warrant an appeal to this court to review an exercise by the judge of his discretion. Where the case is one in which the conditions in which the judge may strike out the action for want of prosecution are satisfied, it does not follow that he must do so. It remains for him to exercise a judicial discretion whether or not to do so. So much is, in my judgment, clear from the passage in Roebuck v. Mungovin (above) from which the judge took his citation : the full passage reads as follows :-

"Where a plaintiff has been guilty of inordinate and inexcusable delay which has prejudiced the defendant, subsequent conduct by the defendant which induces the plaintiff to incur further expense in pursuing the action does not, in law, constitute an absolute bar preventing the defendant from obtaining a striking-out order. Such conduct of the defendant is, of course, a relevant factor to be taken into account by the judge in exercising his discretion whether or not to strike out the claim, the weight to be attached to such conduct depending upon all the circumstances of the particular case. At one extreme, there will be cases like the present where the defendant's actions are minor (as compared with the inordinate delay by the plaintiff) and cannot have lulled the plaintiff into any major additional expenditure: in such a case a judge exercising his discretion will be likely to attach only slight weight to the defendant's actions. At the other extreme one can conceive of a case where, the plaintiff having been guilty of inordinate delay, the defendant has for years thereafter continued with the action thereby leading the plaintiff to incur substantial legal costs: in such a case the judge may attach considerable weight to the defendant's activities. But it is for the judge in each case in exercising his discretion to decide what weight to attach in all the circumstances of the case to the defendant's actions and I trust that in the future there will be few occasions on which the Court of Appeal will be invited to review his decision on the point." (Emphasis added.)

The present case

15. Has a very strong case for reversing the judge been made out here? In my judgment, it has not.

16. A fair summary of the judge's reasons for coming to his conclusion to let the action proceed is this; that the 1st defendant had gone along with the delay in question; in particular, had gone along with the repeated applications for extensions of time made by the plaintiff, and had, not to put to fine a point on it, acquiesced in the delay. The judge clearly took the view that the conduct of the 1st defendant overall was an indication to the plaintiff that the 1st defendant was willing for the action to proceed to trial and indeed an encouragement to the plaintiff so to believe. That is certainly the flavour of the correspondence which we were shown on this appeal, and in those circumstances, it seems to me, it was well within the proper exercise of the judge's discretion to refuse to make the order for which the 1st defendant had asked. The delay in this case was inordinate and inexcusable and I accept that what the 1st defendant had done here hardly amounted to a ringing endorsement of the plaintiff's right to bring the action; but what the 1st defendant did do, in going along with the plaintiff's conduct of the action in this desultory way was sufficient, in my judgment, to entitle the judge to refuse to strike out the action. In a case like this, where different minds might take different views, another judge might well have taken the view that justice to the 1st defendant did require that the action be struck out. But the fact that different minds may reasonably take different views upon a particular matter under consideration is of the essence of a discretion.

Conclusion

17. I see no sufficient reason to interfere with the exercise by the judge of his discretion here and I would accordingly dismiss this appeal.

Rogers, J.A. :

18. I agree the delay in this case was gross and inexcusable. However analysed, it took 6 years from the date of the writ to the application to set the case down for trial, which is effectively the same date as the strike out application. But each case must be looked at on its own facts.

19. I would say this that the Judge below might have exercised his discretion to dismiss the action for want of prosecution. He did not. I am not convinced that he exercised his discretion wrongly having regard to the criticisms which have been made. In any event, I would not myself have exercised the discretion differently. To my mind, the correspondence shows that the Defendants including the 1st Defendant went along with the dilatory manner in which the case proceeded. That conduct was more than merely sitting back and doing nothing. On occasions, the 1st Defendant clearly conducted itself in a manner where an outside observer would conclude that it was content with the manner in which the action was proceeding.

20. I would, accordingly, also dismiss this appeal.

Mortimer V-P:

21. I like the other members of the Court see no good reason for interfering with the judge's discretion in spite of the delay which has taken place, which is, to say the least, excessive and inexcusable.

22. I also take the view that the conduct of the 1st defendant in agreeing to all 10 consent orders amounted to acquiescence in and condonation of the delay. With the greatest respect I agree with everything that fell from Godfrey JA in his judgment.

23. I would for those reasons dismiss this appeal.

24. In those circumstances the appeal is dismissed.