CHAN KEUNG v. PATT MANFIELD & CO. LTD.

21990 No. A8385

IN THE SUPREME COURT OF HONG KONG

HIGH COURT

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J U D G M E N T

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1. This is an application, pursuant to Section 30 of the Limitation Ordinance, Cap 347, ("the Ordinance"), that the court, in its discretion, override the three year time limit - as set out in Section 27 of the Ordinance - for the plaintiff to issue proceedings for damages for personal injuries.

2. It comes by way of a preliminary issue in the substantive case herein in which the plaintiff sues the defendant, ("Patt"), a Hong Kong registered company, for damages for personal injuries suffered by him over 7 years ago - on the 14th day of November 1985 - in the course of his employment by Patt as a seaman on board the motor vessel "Alucom". The plaintiff says he was struck on his forehead by a piece of timber which was being moved with a hoist and which fell into the hold where he was working and this resulted in his being hospitalised for 5 months and in him suffering injuries which have been assessed at a 30% disability.

3. The writ was issued on the 6th of December 1990 and there is no argument that - subject to this application - it is statute barred.

4. Section 30 has two relevant subsections - nos.1 and 3 - which read as follows -

"(1) If it appears to the court that is (sic) would be equitable to allow an action to proceed having regard to the degree to which -

(a) the provisions of section 27 or 28 prejudice the plaintiff or any person whom he represents; and

(b) any decision of the court under this subsection would prejudice the defendant or any person whom he represents, the court may direct that those provisions shall not apply to the action, or shall not apply to any specified cause of action to which the action relates.

(3) In acting under this section the court shall have regard to all the circumstances of the case and in particular to -

(a) the length of, and the reasons for, the delay on the part of the plaintiff;

(b) the extent to which, having regard to the delay, the evidence adduced or likely to be adduced by the plaintiff or the defendant is or is likely to be less cogent than if the action had been brought within the time allowed by section 27 or 28, as the case may be;

(c) the conduct of the defendant after the cause of action, arose, including the extent, if any, to which he responded to requests reasonably made by the plaintiff for information or inspection for the purpose of ascertaining facts which were or might be relevant to the plaintiff's cause of action against the defendant;

(d) the duration of any disability of the plaintiff arising after the date of the accrual of the cause of action;

(e) the extent to which the plaintiff acted promptly and reasonably once he knew whether or not the act or omission of the defendant, to which the injury was attributable, might be capable at that time of giving rise to an action for damages;

(f) the steps, if any taken by the plaintiff to obtain medical, legal or other expert advice and the nature of any such advice he may have received."

5. Mr Neville Sarony QC, for the plaintiff, has directed my attention to a number of authorities and - in so far as they guide me on the law - these have been accepted by Mr Alan Leong, Counsel for the defendant.

6. I was referred to Simpson v Norwest Holst Southern Ltd [1980] 1 WLR 968 at p975 for the proposition that Section 2D, (the English equivalent of Section 30), gave me a wide discretion to override time limits and that the relevant words of the section were so clear that they cannot be construed restrictively as applying only to exceptional cases.

7. I was also referred to Thompson v Brown [1981] 1 WLR 744 at p750 HL for the propositions that a direction under Section 30 must always be highly prejudicial to the defendant and that the degree to which the plaintiff would be prejudiced - by being prevented from proceeding with his action - is affected by how good or bad would have been his prospects of success against the defendant and will be affected also by the extent to which the plaintiff would be able to recover the value of his lost prospects of success in an action for negligence against his solicitors. In that case the fact that - if no direction had been made - the plaintiff would have had an unanswerable or cast-iron claim against his solicitors - for the full damages that he could have recovered against the defendant if the action had proceeded - was described by Lord Diplock, at p752, as a highly relevant consideration.

8. Lord Diplock also described the court's discretion when considering such an application as being unfettered.

9. In Donovan v Gwentoys Ltd [1990] 1 WLR 472 HL, it was considered to be not equitable to require the defendants to meet a claim - first made five years after the event complained of - when the plaintiff had an unanswerable claim against her solicitor.

Lord Griffiths said - at p479 -

"The primary purpose of the limitation period is to protect a defendant from the injustice of having to face a stale claim, that is, a claim with which he never expected to have to deal."

10. He went on to say that it must always be relevant to consider when the defendant first had notification of the claim and thus the opportunity he will have to meet the claim at the trial.

11. I was then referred to Conry v Simpson [1983] 3 AER 369 as an example of a case where a direction was given despite the fact that the plaintiff had a case against his former solicitors - but in that case it was not described as being cast-iron.

12. On appeal - confirming the trial judge's view - Stephenson LJ at p374 - said -

".... it is very seldom that a remedy against a solicitor can be as satisfactory as a remedy against the original tortfeasor, ...."

13. Halford v Brookes [1991] 1 WLR 428 CA was an example of a case in which the primary limitation period was disapplied - one of the grounds being that there was no legitimate ground upon which to criticise the personal conduct of the plaintiff.

14. In Halford, Lord Donaldson of Lymington M.R., at p444, described the court's task as follows -

"In a word, the court has to balance the prejudice to the plaintiff involved in being shut out from prosecuting his claim against the prejudice to the defendant in being called upon to resist the claim after the primary time limit has expired. It is only if, balancing those competing prejudices, the court concludes that it would be equitable, i.e. "fair", to allow the action to proceed that it will extend the primary time limit by disapplying it."

15. Thus, I have to balance the degree to which the parties are prejudiced and I am directed to have specific regard to all the circumstances of the case and in particular to those as set out in subsection (3).

16. The plaintiff's case is reasonably straightforward. He says Patt is his employer and that this is what he - personally - has always said and that the delay in suing Patt arose because of Patt's misleading and/or duplicitous acts together with such acts by another company - Drado Shipping Co Ltd, ("Drado"), - a company which was registered in the Republic of Liberia.

17. Drado, the plaintiff says, was an associate company of Patt. In effect, he says, Patt and Drado were one and the same thing. This assertion is an important part of the plaintiff's argument on prejudice - specifically on Patt's state of knowledge of matters relevant to the instant case from the time of the accident to date.

18. The sequence of events is set out in the affirmation of Margaret Cheng, Legal Aid Counsel, acting on behalf of the plaintiff, sworn on the 13th of January 1992, ("Cheng's first Affirmation"). The plaintiff himself has also made affirmations.

19. The following facts - as set out in such affirmations and/or as agreed before me by Counsel - are not in dispute.

1. The plaintiff signed a contract of employment dated the 22nd of April 1985, ("the Contract"). The original version is in Chinese and bears Patt's chop. The English translation shows that the Contract refers to the plaintiff as the employee and commences with the sentence -

"This to (sic) certify that the company now appoints you to the post of able seaman in the fleet managed by the company. Both you and the company agree to make this Employment Agreement (hereinafter called "the Agreement") with the following terms and conditions for our mutual compliance: ...."

It goes on to specify that the company may terminate the agreement at any time, that the company is entitled to deploy the plaintiff to any vessel in the company's fleet, and that the company will pay the plaintiff a basic salary of HK$2,810 per month within the agreement period.

Throughout the Contract reference is made to "the company" and to the company's responsibilities.

The only other legal party referred to in the Contract - apart from the plaintiff - is "the owner". Such reference is as follows -

"If during your service period the vessel is sold or you are replaced by seaman (sic) of other nationality, or the owner recover (sic) the right to operation of the vessel, you will receive a compensation, ...."

The translation ends - "Patt Manfield and Co Ltd - Chop affixed".

2. A document entitled "STANDARD CLAUSES AND TERMS OF SERVICE FOR HONG KONG SEAMEN EMPLOYED IN A FOREIGN REGISTERED SHIP (FOR ATTACHMENT TO ARTICLES OF AGREEMENT)", ("the SCT"), is also of importance. It is undated and its status is not entirely clear.

The plaintiff says he never saw the SCT but Patt says that it was available to be seen in its office. The plaintiff was not cross-examined on this point and Mr Leong accepts that I am bound by the plaintiff's evidence that he had no knowledge of it. In any event, it says that the Plaintiff's employer was Patt albeit with the limitation that such employment was "for the purposes of such agreement".

The SCT appears to have been operative at the time of the Contract in so far as the "Alucom" is listed as one of the ships that it covers. It also states that Drado is the "registered managing owner or manager" of the "Alucom" and that Patt is the vessel's Hong Kong agent.

3. Patt is in the business, inter alia, of acting as ship agents or ship managers for vessels owned by its principals and in the course of such business it recruits seamen.

4. The plaintiff says that when he instructed the Department of Legal Aid, ("DLA"), to seek compensation for him he told them that his employer was Patt. This is verified by the fact that on the 12th of December 1986 he was issued with a Legal Aid Certificate - Form (iv) - for the purpose of taking Employees' Compensation proceedings - and whilst the Certificate itself does not specify a proposed defendant the "NOTICE OF ISSUE OF LEGAL AID CERTIFICATE" - Form (viii) - specifies that the EC proceedings are to be between the plaintiff as applicant and Patt as respondent.

5. The "Alucom" was at all material times owned by Drado who had in force at the time of the accident a protection and indemnity policy for her, ("the policy"), with the Swedish P & I Club, ("the Club").

The policy specified the "Alucom" as the vessel covered and contained a special condition as follows -

"FAR EAST CREW CLAUSE, 20,2,80, NEVERTHELESS, IT IS AGREED THAT IN CASES WHERE CREW MEMBERS ARE ENGAGED ON CONTRACTS OF EMPLOYMENT SUBJECT TO LIBERIAN MARITIME REGULATIONS RECOVERY HEREUNDER SHALL BE IN ACCORDANCE WITH THE CONTRACT OF EMPLOYMENT OR THE FAR EAST CREW CLAUSE AS APPLICABLE."

Counsel were not able to help me with the exact meaning of this condition but on its face it appears to be concerned with liability for claims arising from contracts of employment.

6. On the 18th of December 1985 - i.e. in the month following the accident - a "NOTICE BY EMPLOYER OF AN ACCIDENT TO AN EMPLOYEE RESULTING IN INCAPACITY" - the statutory Form 2 under the Employees' Compensation Ordinance, Cap 282 - was completed naming the plaintiff as employee and the employer as Drado with an address given as c/o Patt.

The Form 2 was signed by Mr Hu Chao-hui, ("Mr Hu"), as a director of, and on behalf of, Patt as agents. The Club is named as the insurance company.

At the same time Patt - acting as agents for Drado - submitted - by letter - to the jurisdiction of this court. The letter, like the Form 2, was signed by Mr Hu as a director of Patt which, in turn, was described as agents for Drado.

7. On the 12th of May 1986 Drado decided to dissolve itself and consequent thereon it was dissolved formally on the 6th of August 1986.

It was not disputed before me that under Liberian law Drado remained liable for its obligations for three years after dissolution, i.e. until the 6th of August 1989.

8. Subsequently, on the 5th of January 1987, in ECC No.4 of 1987, DLA issued an application on behalf of the plaintiff, as the employee, against Drado as the employer. By Answer dated 27th of January 1987 Drado admitted the allegation that it was the employer. On the 11th of July 1988 the case was settled for $296,114.18.

There was no evidence to such effect but it was not disputed before me that the money for the settlement came directly or indirectly from the Club and that the Club paid because the proceedings were within the three year post-dissolution liability period.

9. On the 7th of November 1988 Messrs Kwan and Kwan - who by then - and as and from the 4th of March 1988 - were acting for the plaintiff - wrote to Drado's solicitors informing them of the plaintiff's intent to commence a common law action for damages against Drado.

10. On the 14th of November 1988 the three year period for the issue of proceedings for personal injuries expired and ten days thereafter - on the 24th of November 1988 - Messrs Kwan and Kwan - issued a writ for common law damages against Drado, ("the Drado writ").

11. On the 21st of December 1988 Drado issued a Summons to set aside service of the Drado writ on the grounds that it had been issued against a company registered in a foreign jurisdiction without prior leave from the court to so do. On the 6th of February 1990 an order was made - pursuant to such Summons - setting aside such service. The order was not appealed against nor was there any subsequent attempt by the plaintiff to obtain leave to serve out of the jurisdiction against Drado or to join Patt as a co-defendant.

12. The Summons to set aside service was grounded upon an affirmation by Mr Hu dated the 21st December 1988 in which he said that he had been a director of Drado - Drado by this time having been dissolved - and was at that time duly authorised by Drado to make the affirmation on its behalf.

A company search of Patt - made by the plaintiff's legal advisers - showed that Mr Hu was elected as a director on the 16th of June 1960 and resigned on the 30th of September 1989. Thus, Mr Hu was a director of Drado until its dissolution and a director of Patt until the 30th of September 1989.

13. Mr K F Ng - originally of Messrs Lo, Wong and Tsui and now of Messrs Ng and Partners - was the solicitor advising both Patt and Drado from the time of the ECC proceedings to date.

Plaintiff's case

20. The plaintiff's case centres on the argument that Patt is and always has been the real employer and that the delay in suing it is a direct result of the confusion caused by Drado in - wrongly - asserting that it was the employer. It is an integral part of the plaintiff's argument that Patt - for reasons best known to itself - acquiesced in this false assertion. The plaintiff goes on to say that there is a coincidence of personnel between Patt and Drado - specifically Mr Hu and Mr Ng - so much so that Patt must have known at all times what was happening and that therefore Patt cannot now be prejudiced - in the sense of having been previously unaware of the plaintiff's injury and claims.

21. The plaintiff points to the following matters to demonstrate the similarity between the two companies.

1. Both had Mr Hu as a director and Mr Ng as their solicitor.

2. The Form 2 named the employer as Drado c/o Patt and was signed by Mr Hu as a director of Patt.

3. The owner of the "Alucom" was Drado c/o Patt.

4. Both the ECC application and the Drado writ were issued against Drado c/o Patt.

22. The plaintiff says the reason for the false assertion by Drado in the ECC proceedings - that it was the employer - was that Patt knew that in order to retain - under Marine Department Regulations - its right to continue to be a recruiter of Hong Kong workers for foreign registered ships - the ECC claim would have to be met. It was decided that Drado would take the responsibility because it was known - at the time of the completion of the Form 2 - that Drado was about to be dissolved and that under Liberian law its responsibility for liabilities incurred prior thereto would cease 3 years after dissolution. Thus, they calculated that Drado would be out of the picture by the time the claim for common law damages came to Court. Drado - by posing as employer - would be able to limit Drado/Patt's responsibility to statutory compensation only.

23. It was for this reason, says the plaintiff, that Drado/Patt decided deliberately to mislead the plaintiff - or more accurately the plaintiff's lawyers - into believing that Drado was the actual employer.

24. In argument Mr Sarony did not press the suggestion - first made in Cheng's first Affirmation - that the alleged misleading of the plaintiff was a deliberate act - in the sense of it being duplicitous or mala fide. He said that all that was really necessary was for me to be satisfied that the plaintiff was in fact misled - whatever the motivation of Drado/Patt.

25. That is the plaintiff's argument on prejudice - Patt misled the plaintiff and has known all about these matters from the very beginning.

26. As to the particularised circumstances that I must have regard to Mr Sarony says - as to paragraph (a) - the length of, and reasons for, the plaintiff's delay - that this is explained by the fact that he was misled.

27. The evidence - paragraph (b) - ought not to be affected because Patt has always known what was going on, knew that there was a potential claim for common law damages and therefore ought to have safeguarded its papers and its evidence.

28. Paragraph (c) is covered by his argument on paragraph (a), paragraph (d) is not applicable and as to paragraph (e) he says the plaintiff acted promptly and reasonably at all times.

Patt's argument

29. Mr Leong presented his arguments on the particularised circumstances as follows -

(a) Delay

The fact of the matter - from Patt's point of view - is that Drado is the employer and that Patt is Drado's agent. Both Drado and Patt have said this consistently from the beginning. If the plaintiff thinks differently then he ought to have sued Patt at the start. Patt's consistence in this matter is evidenced - it says - by the manner in which it signed the Form 2. Another example is that Patt signed as agent for Drado when - on the 8th of April 1986 - it wrote to the US Coast Guard Headquarters advising them that the "Alucom" had been sold. In a word, Mr Leong says that when the plaintiff issued the Drado writ he had available to him all the arguments now used by him when he says that Patt was the employer. Why should he be allowed to change his mind now?

(b) Cogency of the evidence

Patt says that it will be prejudiced under this heading because it has moved office twice since 1985 and many of the documents available to it - relevant to the action - have either been destroyed or lost. For example, correspondence with the Master of the "Alucom" is no longer available nor is the agency agreement between Drado and Patt. Further, Patt was not alerted to the possibility of its being sued. The writ was issued on the 6th December 1990 - 5 years after the accident - and Patt has not - throughout the more than 7 years since the accident - had an opportunity of having the plaintiff examined by its doctor.

(c) Conduct of the defendant

Patt says its behaviour cannot be faulted.

(e) The plaintiff's actions

Whatever may be said of the plaintiff's actions as an individual Patt says that its legal advisers have acted neither promptly nor reasonably.

30. Mr Leong then drew my attention to other circumstances which he said I ought to consider. First, he said that the plaintiff had a cast-iron case against Messrs Kwan and Kwan for negligence in that - after service of the Summons to set aside - they did not apply for leave to serve out of the jurisdiction. Had they done so at that time - December 1988 - and been successful in so doing - they would have effected service on Drado within the three year period and there is no reason to believe that Drado - or more accurately the Club - would not have accepted Drado's avowed and admitted status as the employer and the action could have proceeded. If it had resulted in judgment against Drado then such would have been satisfied by the Club.

31. Further, in view of the plaintiff's original instructions and of the then extant documentation - specifically of the Contract and the SCT - Messrs Kwan and Kwan - at that time - ought to have considered the possibility of joining Patt as a co-defendant.

32. Mr Leong adds that if - contrary to Patt's contention - the plaintiff does establish that Patt was the employer and is eventually successful against Patt then Patt - unlike Drado - will not have the benefit of an indemnity to turn to.

The balance

33. I consider that there are two major circumstances that I must consider apart from the six specified particulars. They are - who was the employer and what is the strength or otherwise of the plaintiff's possible actions against his solicitors.

The employer

34. It is agreed by the parties that I have insufficient evidence in this application to come to a firm conclusion on this matter. For example, we do not as yet have the benefit of discovery nor have we had any oral evidence. However, I must form a view because one of the matters I must weigh is the plaintiff's chances of success against Patt - should I permit the action to continue.

35. I must say that I find the fact that the plaintiff - as an individual - has been consistent in his belief that Patt was his employer persuasive. When I consider this in conjunction with what appears to me to be the clear wording of the Contract I feel that I must come to the conclusion that the plaintiff has an arguable case that Patt was the employer.

36. I am reinforced in this view by Patt's argument on the phraseology of the SCT. Mr Leong's argument was that Patt had to be the plaintiff's employer for the purposes of the articles of agreement because it was essential - if it was to retain its licence from the Marine Department as recruiters in Hong Kong of Hong Kong seamen who were to be employed in foreign registered ships - that it be the employer for the purposes of Cap 282. He says that the limitation in the SCT that the plaintiff's employment was only "for the purposes of such agreement" could be explained by saying that the plaintiff was only employed by Patt for the purposes of Cap 282. This was not a concession by Mr Leong but simply his suggestion as to what the words of limitation might mean.

37. I must say I find this argument difficult to follow. It amounts to saying that Patt was the plaintiff's employer for the purposes of Cap 282 but not for any other purpose. I find this concept of a split responsibility employer hard to accept.

38. In any event, Mr Sarony points to subsection (1) of section 40 of Cap 282 - which is in the Part dealing with compulsory insurance - and which reads as follows -

"40. (1) No employer shall employ any employee in any employment unless there is in force in relation to such employee a policy of insurance issued by an insurer for the full amount of the liability of the employer under this Ordinance and independently of this Ordinance for any injury to such employee by accident arising out of and in the course of his employment."

39. Mr Sarony says - and Mr Leong accepted - that the words "and independently of this Ordinance" mean that the insurance should cover liability for both employees' compensation and for common law damages.

40. Therefore, if Mr Leong's suggested explanation - and I have no other explanation as to what the words of limitation in the SCT mean - is correct, i.e. that Patt was the employer for the purposes only of Cap 282, it was also the employer for the purposes of common law damages which - in reality - is the only meaning of the word "employer" which is of interest to the plaintiff.

41. I accept that the fact that Drado was insured, (the exact nature of the insurance we cannot be certain about but the Club appears to have met the plaintiff's ECC claim and therefore it must have covered at least certain categories of claims arising out of contracts of employment), is persuasive of Drado being the employer. However that fact does not, by itself, outweigh the more persuasive contents of the Contract and the SCT.

42. In summary, I am persuaded that the plaintiff has an arguable case that Patt was his employer.

43. May I add - so that there is no misunderstanding - since it is agreed that I cannot come to a firm conclusion - as to who was the employer - I cannot say whether or not Drado/Patt misled the Plaintiff at the time of the Form 2. A fortiori, I cannot - and do not - make any finding on the plaintiff's suggestion that such misleading was mala fide. As Mr Leong has pointed out, if Drado was not the employer that does not preclude the possibility that Drado/Patt believed Drado to be so and that such belief was bona fide.

The negligence action

44. I do not believe that the plaintiff's prospects against any of his legal advisers can be described as cast-iron.

45. To start with I do not believe - and Mr Leong did not push this matter - that there is any worthwhile prospect against DLA. I know that the plaintiff's instructions to them were to sue Patt but I cannot say that it was unreasonable for any lawyer - when presented with a situation such as DLA faced - Drado a company not named by its client presenting itself as the employer and being willing to accept the responsibilities of such and being fortified by an insurance policy - acted unreasonably in accepting such a situation. It would - in my view - have been unreal and impractical for them to have done otherwise than to have accepted Drado at face value. This also applies to Kwan and Kwan's actions - when they took over the case - of continuing to accept Drado's position and in - presumably - so advising the plaintiff.

46. However, the plaintiff is on stronger grounds when he looks to Kwan and Kwan's conduct at the time of the Summons to set aside service of the Drado writ. Mr Sarony says they ought not to be criticised because no one wants to pursue an action of this nature outside the jurisdiction and there was no reason at that time for them to be alerted to the idea of joining Patt because the Summons was not relevant to the employer/employee issue. I am not convinced by this and prefer Mr Leong's argument that the proper course for Kwan and Kwan to have adopted would have been to continue against Drado and to join Patt. However, having said that, although Kwan and Kwan's action at the time might be criticised, I doubt whether it was such as to amount to a cast-iron case against them - as understood by the authorities.

47. The "cast-iron cases" referred to in such appear to me to be cases in which there could be no doubt whatsoever about the solicitor's negligence. I do not believe that a case against Kwan and Kwan would be anything like as straightforward. The plaintiff may have an arguable case against them but in my view it is not cast-iron.

48. The other point made by Mr Leong - on the question of prejudice - was that Patt - as distinct from Drado - was not insured. The simple answer to that is that if Patt was the employer then it ought to have been insured and if it was not the employer then the plaintiff's case against it will fail and the fact that it was not insured will be irrelevant.

49. I turn now to the specific headings that I must consider.

(a) The reasons for the delay

The reason is simple enough - it was the fact of Drado coming forward as the employer and the plaintiff accepting this position - until such time as Drado were no longer a mark, (in the sense of the expiry of the three year post-dissolution period). The question is whether the plaintiff is to be blamed for such acceptance. First of all I do not think that the plaintiff himself can be criticised at all. He went to DLA promptly, he told them Patt was his employer, and took their advice thereafter. That seems perfectly reasonable to me. He personally was not responsible for any of the delay. Then I must consider the position of his advisers. As aforesaid I do not think it was unreasonable of DLA to accept Drado as the employer and to advise the plaintiff to so do.

I am concerned about the argument that having taken Drado's money - or Drado's insurer's money - the plaintiff is prevented from now turning around and alleging that Patt is the employer. Mr Leong describes this as his estoppel argument.

The difficulty with his argument - to my mind - is that it is not valid if the plaintiff's acts - of alleging in the ECC proceedings that Drado was his employer and of then taking Drado's money - occurred because Drado/Patt had misled his lawyers. In other words the argument is flawed if it is based on a sequence of events which starts with a tainted act by Patt/Drado. I cannot decide whether or not Patt/Drado did mislead without first of all deciding whether or not Drado was or was not the employer and it is agreed that I cannot come to a firm conclusion on that topic.

Hence, a prerequisite to the estoppel argument is a finding on the truth or otherwise of Drado's assertion that it was the employer and this is something that I am not in a position to rule on.

The argument is thus enervated and cannot assist me either way.

(b) The evidence

I accept Mr Sarony's argument that given the coincidence of personnel - Mr Hu and Mr Ng - Patt has been familiar with the subject matter of this action from the very beginning. All relevant documentation ought to have been with Drado/Patt and it was their responsibility to take care of them. Further - in relation to the agency contract - I take on board Mr Sarony's comment that when Patt is arguing prejudice they point to the lost contract whereas when they originally raised their agency argument - when Mr Hu was affirming on behalf of Drado on the 21st of December 1988 - they said that the agency agreement was verbal.

(c) The conduct of the defendant

This is covered by my comments on paragraph (a).

The parties are agreed that paragraph (d) does not apply.

50. Similarly paragraph (e) is covered by the discussion on delay and as to paragraph (f) I have already said that I do not think the plaintiff is to be criticised for the steps he took to obtain advice. The nature of such advice I have already commented on.

51. Given that the plaintiff does not have a cast-iron case against his legal advisers he will certainly be prejudiced if the case is not allowed to continue. I balance this with the fact that the prejudice to Patt ought to be limited given the reality that - on the papers before me - Patt and Drado were clearly associated. If it is not so limited - because documents have been lost or other evidence is not available - then Patt must bear some of the responsibility for that situation. It cannot be said that Patt are now being required to face a stale claim - in the sense of having to face a claim which they previously knew nothing about at all. Indeed, it appears from the papers that Patt acted for Drado in some and perhaps most aspects of this matter from the Form 2 onwards. Certainly the existence of a claim for common law damages against them is new but - if the plaintiff's version of events is correct - that Patt has at all times been the employer - then the possibility of an eventual claim against them is something that they ought to have anticipated. Likewise - if Drado was the employer - then in the light of Drado's dissolution and of the wording of the Contract and of the SCT Patt ought to have anticipated that the plaintiff might eventually attempt to allege otherwise and should therefore have kept themselves in readiness to rebut such a claim.

52. In my view in all the circumstances it would be equitable to allow the action to proceed and accordingly I direct that the provisions of section 27 do not apply to this action.

53. I make an order nisi that the costs of this application be costs in the cause.

54. Dated the 2nd day of April 1993.