HOLYROOD LTD v. P & T ARCHITECTS AND ENGINEERS LTD

HCCT 28/2006

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

CONSTRUCTION AND ARBITRATION PROCEEDINGS

NO. 28 OF 2006

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D E C I S I O N

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1.  This is an application by the defendant for costs ordered in its favour to be taxed on the indemnity scale.

2.  This is one of the many proceedings that arose out of the development “Oasis” on Peak Road.  The writ was issued on 30 November 2005 but nothing more was done after close of pleadings in mid-April 2006.  The defendant issued a summons to strike out on 16 July 2012.  An unless order was made on 5 November 2012 requiring the plaintiff to file affidavit evidence in opposition no later than 4 pm on 12 November 2012.

3.  The plaintiff’s new solicitors then filed a notice to act and an affirmation of Mr Mike Chan in opposition on 12 November. The affirmation put the blame of delay on the plaintiff’s previous solicitors and also on the inaction of the defendant.  The affirmation was not served on the previous solicitors for comment.

4.  The plaintiff then engaged another firm of solicitors who filed a notice of change of solicitors on 23 November.  Instead of continuing with the opposition to the striking out, the present solicitors issued a notice of discontinuance on 30 November.  The action was discontinued on 6 December with costs of the action including the summonses to strike out and to discontinue ordered to be paid by the plaintiff to the defendant.  The defendant seeks indemnity scale for taxation.

5.  This action was not started with any impetus. The writ was issued on 30 November 2005 with a general endorsement.  It was not served but the press reported on it several days later.  The defendant’s solicitors then served a notice on the plaintiff’s solicitors under O 12 r 8A requiring service of the writ. The writ was only served on 28 December, the last day permitted by rule 8A.

6.  The statement of claim was not served within time.  The defendant applied for an unless order on 24 January 2006 and an unless order was granted on 17 January 2006.  The statement of claim was then filed and served on 17 February, the deadline in the unless order.

7.  The defendant filed and served its defence on 17 March 2006 and the plaintiff filed and served its reply on 31 March 2006.  The defendant applied to transfer the action to the Construction List.  Despite strenuous objections by the plaintiff, a transfer order was made on 4 April 2006 by Reyes J.

8.  Nothing happened until the implementation of the CJR.  The defendant’s solicitors then on 6 April 2009 invited the plaintiff to discontinue this action.  The plaintiff’s then solicitors refused but responded on 20 April by saying that the plaintiff would amend the pleadings to put in an alternative cause of action.  They also served a notice of intention to proceed on the same day.

9.  On 21 May 2009 the plaintiff’s then solicitors further sought consent in advance for the proposed amendments to the statement of claim but without producing the draft amendments to the defendant’s solicitors. 

10.  The plaintiff’s then solicitors in a letter addressed to the plaintiff and dated 17 July 2012, which was produced by Mr Mike Chan in his affirmation filed on 12 November 2012, stated that, “The action had been held in abeyance by the plaintiff since 2009 … and the solicitors had no instruction to act for the plaintiff since 2009”. 

11.  From the above, it can be seen that the action was not instituted with any impetus and without any will of the plaintiff to bring it to trial.  After the close of pleadings in mid-April 2006, nothing was done.  Solicitors were not even given instructions on the conduct since 2009 when the action was put on hold by the plaintiff.  There was no will to move the action and bring it to trial but there was no attempt to put an end to it either.  The action was just left pending and it was like the Sword of Damocles hanging over the head of the defendant, a company of architects and engineers.

12.  When the defendant issued the summons to strike out on 16 July 2012, the plaintiff still intimated that it would continue with the fight despite nothing had been done in the past six and a half years.

13.  Mr Hasofer of the plaintiff’s present solicitors opposed indemnity scale of taxation and he spared no effort in doing so.  He submitted that the writ was issued just two days before the expiry of the limitation period.  The issue of liability of the defendant, being the engineer of the building project, could overlap with or be in the alternative to that of the builder who was then engaged in arbitration with the plaintiff.

14.  The plaintiff could not bring the defendant into the arbitration for want of an arbitration clause with the defendant.  The arbitration proceedings and this action therefore had to co-exist.  Mr Hasofer said that nothing was done in this action because the plaintiff was waiting for the arbitration to conclude before deciding on what to do in this action, if any. 

15.  I do not think it reasonable for the plaintiff to have instituted the action and then do nothing after close of pleadings just to wait for the outcome of another set of proceedings.  They should have at least asked whether the defendant would agree with their putting the action on hold.  They did not.  Alternatively, they could apply to the court for a temporary stay.  This they also did not do. 

16.  To make things worse, the inaction continued despite the arbitration proceedings with the builder was fully settled on 27 July 2007.  There was no explanation for the continuation of the inaction.  If Mr Hasofer’s explanation for inaction prior to the settlement of the arbitration as provided by the plaintiff was a genuine one, then one would expect that the action would resume activity or be discontinued after 27 July 2007.

17.  However, neither happened.  The plaintiff’s inaction after 27 July 2007 therefore makes the explanation for inaction before that day as proffered by Mr Hasofer on the basis of instructions unacceptable.  I reject it as a matter of fact.

18.  The inaction continued until after the CJR was implemented in April 2009.  After the intimation on 20 April and 21 May 2009 by the plaintiff’s then solicitors that the plaintiff would amend the cause of action, inactivity resumed and remained for another 3 years till July 2012, when the defendant issued the striking-out summons.

19.  Mr Hasofer submitted on the basis of instructions that a draft amended statement of claim was prepared by counsel in October 2009 which required instructions to complete.  However, Madam Oung, the only person in the plaintiff company who could give instructions, fell ill in October 2010 and could not give the necessary instructions.  Madam Oung further suffered a stroke in March 2011 and was hospitalised till now.  She was the only person in the plaintiff company who could give the necessary instructions, as all others in the know had left.

20.  I accept that Madam Oung was hospitalised since March/April 2011, as that was referred to in Mr Mike Chan’s affirmation and supported by medical certificates.  I however reject the alleged fact that she was ill since 2010.  I reject the allegation because Mr Mike Chan said in paragraph 8 of his affirmation that “Before her stroke in March, my mother has been the public face of the plaintiff, being responsible for the day-to-day management of the plaintiff.”  Madam Oung is Mr Chan’s mother.

21.  If Madam Oung was indeed ill to the extent that she could not give the necessary instructions to complete the amended statement of claim since 2010, Mr Chan would have said so and produced the supporting medical report and records.  The allegation that she was ill in 2010 is also contrary to the tenor of what Mr Chan has said in his affirmation.

22.  Madam Oung in other proceedings in Hong Kong also has a history of being able to produce medical reports saying that she was ill when in fact she was jetting around in South-East Asia.  The allegation of her being ill in 2010, that she could not give instructions, is also contrary to the statement in the letter of the previous solicitors dated 17 July 2012 that the action was held in abeyance by the plaintiff in 2009.

23.  I reject the allegation of fact that Madam Oung was ill in 2010.  I further find that the action was held in abeyance by the plaintiff in 2009.

24.  Despite Madam Oung was hospitalised in April 2011, the plaintiff was not without management.  Mr Mike Chan came back and took the management over.  However, he chose to do nothing in the action as he thought the defendant was not doing anything.  He just left it untouched and attended to other things.

25.  I think the defendant’s inaction is not an excuse for the plaintiff not to prosecute the action and to do so with diligence.  All the undisputed facts and the facts found above show that the action was instituted not with the aim or will to bring it to trial.

26.  The court procedure was therefore not used for the designed purpose and has been abused by the plaintiff.  The defendant was admittedly prejudiced, though Mr Hasofer submitted that the prejudice is not as strong or extensive as the defendant alleges.  However, to bring a claim with no intention to bring it to trial is to make use of the court procedure for an ulterior motive and is an abuse of the court procedure.  This is an affront to the decency of the court.

27.  I take the view that the court should express its disapproval strongly by ordering costs to be taxed on the indemnity scale, and I so order.  I also order the plaintiff to pay the defendant the costs of this application also to be taxed on the indemnity scale.