TEAM GLORY DEVELOPMENT LTD v. SO LUEN FAI

HCA 7943/1995

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

ACTION NO. 7943 OF 1995

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D E C I S I O N

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Background

1.  This is the Plaintiff’s appeal against the order of Master Lung made on 25 January 2008 dismissing the Plaintiff’s claim for want of prosecution on the ground that there was inordinate and inexcusable delay in prosecuting its claim.

2.  The Plaintiff is the registered owner of a plot of land known as section A of Lot 2030 in DD No 95 in Tai Po (“the said Lot”), which the Plaintiff purchased from the former owner on 22 March 1994.  The 1^st named Defendant is the occupier of a small portion of land within the said Lot.  On 8 August 1995, the Plaintiff issued a Writ of Summons against the 1^st named Defendant and all other occupiers for trespass.  The 1^st named Defendant filed a Defence and Counterclaim on 30 October 1995.  In short, the 1^st named Defendant’s defences are (1) adverse possession since 1953; (2) laches and acquiescence on the part of the Plaintiff; and (3) proprietary estoppel.  The Plaintiff’s Reply and Defence to Counterclaim was filed on 29 December 1995.  A few rounds of requests for and answers to further and better particulars were exchanged.  Then the 1^st named Defendant amended its Defence and Counterclaim on 2 October 1996.  Thereafter, the action went dormant for about ten and half years until the Plaintiff filed a Notice of Intention to Proceed on 22 March 2007.  On 21 May 2007, the 1^st named Defendant took out a Summons to strike out the Plaintiff’s action for want of prosecution, pursuant to Order 25 rule 1(4) of the Rules of the High Court and its inherent jurisdiction.  On 25 January 2008, Master Lung struck out the Plaintiff’s action.  Against that decision, the Plaintiff now appeals.

The applicable legal principles

3.  Where there has been a substantial period of failure to prosecute in civil proceedings, an application to dismiss the action can be made both under Order 25 rule 1(4) and the court’s inherent jurisdiction.  Counsel are in agreement that the legal principles applicable to such an application were set out by the House of Lords in Birkett And James [1978] AC 297 at 318.  The power to strike out an action for want of prosecution should be exercised only where the court is satisfied either (1) that the default has been intentional and contumelious or (2) that there has been inordinate and inexcusable delay on the part of the plaintiff or his lawyers, and (a) that such delay will give rise to a substantial risk that it is not possible to have a fair trial of the issues in the action or (b) is such as is likely to cause or to have caused serious prejudice to the defendants either as between themselves and the plaintiff or between each other or between them and a third party.

4.  The 1^st named Defendant is relying on the second limb under the second rule, i.e. inordinate and inexcusable delay likely to cause or to have caused serious prejudice.  Counsel are also in agreement that under the second rule, there must be a causal connection between the delay and the inability to have a fair trial or the serious prejudice: per Slade LJ in Rath v CS Lawrence & Partners [1991] 3 All ER 679 at 688.  The prejudice relied on by the 1^st named Defendant is that three material witnesses have died while the memory of other witnesses is fading through lapse of time.  The Plaintiff argues that the delay is excusable.  Its answer to the complaint of prejudice is that while the 1^st named Defendant has been deprived of the luxury of calling certain witnesses a fair trial is nevertheless still possible.  As counsel’s arguments unfold, it becomes apparent that their dispute on question of law is whether the court should or is entitled to take into consideration the ability to have a fair trial when assessing the seriousness of the prejudice under the second limb.  Mr Chan SC, counsel for the Plaintiff, argues for the affirmative, while Mr Shum, counsel for the 1^st named Defendant, argues to the contrary.  Mr Shum submits that the two limbs are separate, that the 1^st named Defendant is proceeding under the second limb and it is not open to the Plaintiff to dictate how the 1^st named Defendant conducts its proceedings by forcing the 1^st named Defendant to take a course under the first limb.

5.  The principles in Birkett And James were laid down for the purpose of dealing with a plaintiff’s dilatory conduct in the prosecution of his claim.  At page 317, Lord Diplock gave the following genesis for the principles:

   “The modern practice as to dismissing actions for want of prosecution dates from 1967.  By that time the dilatory conduct of proceedings in the High Court by solicitors to plaintiffs whose causes of action would turn upon the reliability of witnesses’ recollections of past events had become a scandal, particularly in the case of those who litigated with the help of legal aid.  Postponement of a trial until memories had faded and witnesses had vanished created a substantial risk that justice could not be done.  True it is that at the trial the evils of delay would be likely to bear more heavily on the plaintiff on whom the onus would lie of proving that things had happened as he alleged, but the risk that justice would not be done to him extended also to the defendant and, even if successful at the trial, the defendant was likely to be out of pocket for his costs, which in legally aided cases he had little prospect of recovering.

Although the rules of the Supreme Court contain express provision for ordering actions to be dismissed for failure by the plaintiff to comply timeously with some of the more important steps in the preparation of an action for trial, such as delivering the statement of claim, taking out a summons for direction and setting the action down for trial, dilatory tactics had been encouraged by the practice that had grown up for many years prior to 1967 of not applying to dismiss an action for want of prosecution, except upon disobedience to a previous peremptory order that the action should be dismissed unless the plaintiff took within a specified additional time the step on which he had defaulted.

To remedy this High Court judges began to have recourse to the inherent jurisdiction of the court to dismiss an action for want of prosecution even where no previous peremptory order had been made, if the delay on the part of the plaintiff or his legal advisers was so prolonged that to bring the action on for hearing would involve a substantial risk that a fair trial of the issues would not be possible.  This exercise of the inherent jurisdiction of the court first came before the Court of Appeal in Reggentin v Beecholme Bakeries Ltd.  (Note)  [1968] 2 Q.B. 276 (reported in a note to Allen v Sir Alfred McAlpine & Sons Ltd.  [1968] 2 Q.B. 229) and Fitzpatrick v Batger & Co. Ltd. [1967] 1 WLR 706.

The dismissal of those actions was upheld and shortly after, in the three leading cases which were heard together and which, for brevity, I shall refer to as Allen v McAlpine [1968] 2 Q.B. 229, the Court of Appeal laid down the principles on which the jurisdiction has been exercised ever since. …”

6.  The rationale for the first rule is obvious.  The rule is to prevent abuse of process of court.  This rule is based on the plaintiff’s dilatory conduct and intentional and contumelious disregard of the court’s peremptory order in the conduct of proceedings.  The second rule evolved when the first rule proved to be inadequate to prevent abuses of process in circumstances where no peremptory order had been made.  It can be seen from the above passages that the basis of the second rule is different from that of the first rule.  It is focused at abuses which involve a substantial risk that a fair trial of the issue would not be possible, i.e. the first limb.  When the rule was formulated by the English Court of Appeal, it was extended to cover prejudice as between the plaintiff and the defendant and as between them or either of them and a third party.  Prejudice was not defined, but to invoke the jurisdiction, the prejudice had to be serious prejudice.

7.  In Trill and Another v Sacher and Others [1993] 1 WLR 1379 at 1399, after reviewing a number of authorities including Birkett And James, Neill LJ extracted some principles and guidelines for use on an application to strike out an action for want of prosecution under the second rule.  Two of such guidelines are pertinent.  First, prejudice to the defendant may take different forms.  Neill LJ specifically quoted as examples of prejudice such as impairment of memory of the witnesses or that witnesses have died or become untraceable through lapse of time.  Second, the prejudicial effect of delay may depend in large measure on the nature of the issues in the case.  Delay has a greater impact on the evidence of an eye witness or a witness who will testify to the words used or representation made than on the evidence of a witness who can rely on contemporaneous record or contemporary documents.  When considering the prejudicial effect of delay, Neill LJ was also focusing on the effect of delay on a fair trial.

8.  Prejudice is difficult to define.  The circumstances under which prejudice may arise are numerous.  While prejudice as between the defendant and the third party has no nexus with inability to have a fair trial, I am unable to regard any prejudice as between the plaintiff and the defendant as real and serious if it has no impact on the inability to have a fair trial.  The example given by Neill LJ clearly demonstrates the point.  I think the two limbs under the second rule are not meant to be tight jackets.  There must be numerous circumstances where prejudice, especially that as between the plaintiff and the defendant, is entangled with the inability to have a fair trial. 

9.   Striking out an action for want of prosecution is one of the most draconian jurisdictions which the court may exercise.  The exercise of such jurisdiction is contrary to two fundamental principles of our legal system.  The first principle is that an action should be determined on its merits.  All controversy in dispute should be fairly determined after due process.  The second principle is that a litigant should not be denied access to the court.  Unless in very clear and unmeritorious cases, a litigant should not be shut out from the court.  The English Court of Appeal must have those two principles in mind when formulating the second rule.  Hence, the prejudice which is required to justify striking out an action for want of prosecution is not any prejudice but serious prejudice.  The threshold is a high one.  In this light, it is difficult to imagine how prejudice which does not have any adverse effect on the ability to have a fair trial could be regarded as serious prejudice as would invoke the court to exercise this draconian jurisdiction. 

10.  Accordingly, I agree with Chan SC’s submission that in considering the question of serious prejudice as between the plaintiff and the defendant under the second limb of the second rule in Birkett AndJames, it is open to the court to look at all the circumstances including whether despite the plaintiff’s delay, it is still possible to have a fair trial of the issues in question.  The question is whether in the totality of the circumstances serious prejudice is likely to be caused or have been caused by the delay.  That is a question of fact.

Whether there was inordinate and inexcusable delay

11.  Since the filing of the Amended Defence and Counterclaim by the 1^st named Defendant on 2 October 1996, no action had been taken by the Plaintiff until the filing of the Notice of Intention to Proceed on 22 March 2007.  There has been a delay of over ten years since the close of pleadings or over eleven years since the issue of the Writ of Summons.

12.  What is inordinate delay cannot be precisely defined.  Whether a delay is or is not inordinate must depend on the facts of each particular case.  For a delay to be inordinate it must exceed, and probably by a substantial margin, the times prescribed by the rules of court for the taking of steps in the action.

13.  The Plaintiff’s case is that it is the registered owner of the said Lot, which is not seriously disputed by the 1^st named Defendant.  The main defence of the 1^st named Defendant is that he has acquired a squatter’s title in respect of part of the land in the said Lot by virtue of more than twenty years’ adverse possession.  Mr Chan SC seeks to explain the delay on the basis of commercial reality and in the light of the messy state of the law on adverse possession created by the events leading to the return of the sovereignty of Hong Kong to the People’s Republic of China on 1 July 1997.  At the time when the present action was started, the law as regards adverse possession was as governed by the Court of Appeal’s decision in Chung Ping Kwan and Others And Lam Island Development Co Ltd [1995] 2 HKLR 228.  Prior to the enactment of the New Territories (Renewable Government Leases) Ordinance in 1973 (“1973 Ordinance”), it was the commonly held opinion that all leasehold interest in the New Territories would expire on 1 July 1997.  Then in Chung Ping Kwan and Others, the Court of Appeal held that as a result of the 1973 Ordinance, a new leasehold interest was created and therefore, for the purpose of adverse possession, time would start to run afresh from the creation of the new statutory lease in 1973.  That decision was delivered on 26 October 1994.  It was favourable to the Plaintiff and justified commencing action against the 1^st named Defendant.

14.  However, in May 1996, the Privy Council reversed the decision of the Court of Appeal and held that the effect of the 1973 Ordinance was a mere extension of the existing lease and did not create a new leasehold interest: see Chung Ping Kwan and Others And Lam Island Development Co Ltd [1997] AC 38.  Accordingly, for the purpose of adverse possession, time would not run afresh from 1973.  The Privy Council’s decision was unfavourable to the Plaintiff.  In the circumstances, it was prudent for the Plaintiff to withhold further proceedings and reconsider its chance of success.

15.  Then two years later, in 1998, three separate actions were commenced in which a new issue was raised, namely whether the New Territories Leases (Extension) Ordinance (“1988 Ordinance”), which was enacted in 1988 to give effect to the Sino-British Joint Declaration on the Question of Hong Kong signed on 19 December 1984 and which extended all New Territories leases for fifty years until 30 June 2047, had the effect of creating new leases and therefore, for the purpose of adverse possession, time would run afresh from 1988 or 1997 when the old leases expired.  Those three cases took some time to run their full course.  It is not necessary for me to go into the reasons for those three decisions, save to mention the results.  On 21 June 2002, Sakhrani J observed in Unijet Limited And Yiu Kwai Hoi, HCA 13637/1998, that the extension in the 1988 Ordinance was achieved by means of either an immediate surrender and re-grant which therefore would have taken place on 25 April 1988 or a reversionary lease the term of which would have commenced on 28 June 1997 immediately after the expiry of the renewed term pursuant to the 1973 Ordinance.  The effect of that decision was favourable to the Plaintiff.  A few months later, on 25 November 2002, Deputy High Court Judge Lam, as he then was, held in Mutual Luck Investment Limited And Yeung Chi Kuen and Others, HCMP 6047/1998, that the effect of the 1988 Ordinance was to create an extension of the old lease.  That decision was followed by Deputy High Court Judge A Cheung, as he then was, in Chan Tin Shi AndLi Tin Sung and Others,HCMP 4191/1998.  The two later decisions were unfavourable to the Plaintiff.  Thus, having waited for four years for a determination of the new issue raised in those three decisions, the Plaintiff found itself amidst conflicting decisions.  Again, the outcome of those three cases gave the Plaintiff excuse for withholding further action pending the outcome of an appeal in any of those decisions.

16.  On 19 November 2004, another two years later, the Court of Appeal in Chan Tin Shi And Li Tin Sung and Others, CACV 71/2003, by a majority, held that the effect of the 1988 Ordinance was to grant the leaseholders a new lease, either in exchange for a deemed surrender of the old lease when the 1988 Ordinance came into effect on 25 April 1988 or commencing upon the expiry of the old lease on 27 June 1997.  That decision was followed by another decision of the Court of Appeal in Chan Suk Yin and Wong Yam Tai And Harvest Good Development Limited, CACV 101/2004, and encouraged the plaintiff in China Overseas Grand Gain Property Development Limited And Mok Yuen Fun and Persons Unknowns, HCMP 968/1999, to apply successfully to strike out a limitation defence in a claim to possession of land in Sheung Shui.  Those decisions rekindled the Plaintiff’s hope of success against the 1^st named Defendant.  But it was prudent for the Plaintiff to withhold proceedings in view of the pending appeal in those three cases to the Court of Final Appeal.

17.  Subsequently in January 2006, the Court of Final Appeal delivered judgment in those three appeals in Chan Tin Shi & Others and Li Tin Sung & Others [2006] 1 HKLRD 185.  This controversy, which had plagued conveyancers and property lawyers in Hong Kong for almost ten years since the Privy Council’s decision in Chung Ping Kwan and Others, was eventually settled.  The Court of Final Appeal conclusively determined the point of law raised by the 1988 Ordinance by holding that the ordinance did not create a new leasehold interest.  The decision of the Court of Final Appeal was unfavourable to the Plaintiff.

18.  However, within days of the decision of the Court of Final Appeal, the plaintiff in Harvest Good Development Limited case commenced judicial review proceedings to challenge the constitutionality of sections 7(2) and 17 of the Limitation Ordinance on the ground that these provisions are inconsistent with the guarantee against deprivation of property without compensation in articles 6 and 105 of the Basic Law: see Harvest Good Development Limited And Secretary for Justice and Others, HCAL 32/2006.  That action would have profound implications on the law on adverse possession.  On 16 July 2007, Hartmann J decided that there was no violation of articles 6 and 105 of the Basic Law despite the effect of the law of adverse possession was to make a valuable compulsory gift of land to a squatter who unlawfully occupied the land as a trespasser in the first place.  It was not until then that the uncertainty of the law on adverse possession created as a result of the return of sovereignty of Hong Kong to the People’s Republic of China was finally resolved.  It was resolved against the Plaintiff.  However, about four months before the decision of Hartmann J was delivered, the Plaintiff had already filed a Notice of Intention to Proceed on 22 March 2007.

19.  There was an inaction of over ten years from the close of pleadings or over eleven years after the issue of the Writ of Summons.  It can hardly be disputed that the delay had exceeded by a substantial margin, the times prescribed by the rules of court for the taking of steps in the action.  By any standard, such delay was inordinate.  Delay which is inordinate is prima facie inexcusable: see Allen v Sir Alfred McAlpine & Sons Ltd [1968] 1 All ER 543 at 561.  The questions are (1) whether the Plaintiff has shown that such delay was excusable and (2) failing that, whether the delay is likely to cause or to have caused serious prejudice to the 1^st named Defendant.

20.  Mr Shum submits that the Plaintiff’s explanation of waiting for the law to be settled by the Court of Final Appeal in the on-going litigations on the same issue is untenable for three reasons.  The first objection is that the Plaintiff never communicated its intention of wait and see to the 1^st named Defendant during the delay.  He argues that the proper course the Plaintiff should have taken was to apply for a stay of the present proceedings pending the judgment of Chan Tin Shi or at least to notify the 1^st named Defendant of its intention and seek his agreement.  That, of course, would have been the proper way the Plaintiff should have conducted the proceedings.  But I think the Plaintiff’s failure to take the proper course only goes to the issue of prejudice and does not affect the issue whether the delay was excusable.  I think the more important question raised by the Plaintiff’s failure to communicate its intention of wait and see and which deserves greater attention is whether the alleged intention was actually andgenuinely held.  The decision of the Privy Council on the 1973 Ordinance was delivered in May 1996.  Following that, the 1^st named Defendant amended his Defence and Counterclaim on 2 October 1996.  Since then the Plaintiff had been inactive for less than two years.  But thereafter, the issue of the 1988 Ordinance was litigated on a very tight schedule all the way to the Court of Final Appeal.  It was prudent for the Plaintiff to wait and see.  I think the issue raised by the 1988 Ordinance must have been well known among conveyancers as well as property lawyers at the material time.  I do not think the argument advanced by Mr Chan SC before me is just a lawyer’s point.  I am satisfied that the decision to wait and see was one which was genuinely made by the Plaintiff upon legal advice.

21.  The second objection raised by Mr Shum is that the decisions of the Court of Appeal and the Court of Final Appeal in Chan Tin Shi were handed down respectively on 19 November 2004 and 5 January 2006.  Hence, the Plaintiff failed to explain for eight of the ten years’ delay from 1996 to 2004.  I think the Plaintiff has only failed to explain a delay of two years from 1996 to 1998.  Since 1998, hope was rekindled by the three cases which took a course of eight years until they were finally disposed of by the Court of Final Appeal in 2006. 

22.  The third objection raised by Mr Shum is that the defences raised by the 1^st named Defendant were not limited to adverse possession, and hence the Plaintiff’s waiting for the decision of Chan Tin Shi is not a reasonable or acceptable reason for the inaction even for the period after 2004.  I respectfully disagree.  It appears to me that adverse possession is the principal defence.  The other defences of laches and acquiescence and proprietary estoppel hinge on the defence of adverse possession to some extent.  In any event, if the 1^st named Defendant would succeed in the defence of adverse possession, there was no point for the Plaintiff to proceed to trial.  It was prudent for the Plaintiff to wait for the determination of this novel point of law which, if determined in its favour, would ensure its success even if the 1^st named Defendant were able to prove the fact of adverse possession.

23.  Mr Chan SC accepts that the Plaintiff could have pursued its claim with greater rigour.  But he submits that the Plaintiff’s delay must be measured against the messy state of the law at the material time and commercial reality.  The issue of adverse possession lies at the very heart of the present action.  A number of contemporaneous actions on precisely the same issue were on-going at the material time.  For the Plaintiff to actively pursue the claim at the time would achieve nothing but to create just one more decision among the many conflicting ones.  The Plaintiff would have achieved nothing by pursuing the matter at that stage and the 1^st named Defendant would have benefited from nothing.  Whatever the outcome, the decision of the Court of First Instance or the Court of Appeal would not have been final.  The parties would have to go all the way to the Court of Final Appeal.  If it was a virtual certainty that some other parties already ahead of them would be taking that course, what difference would it make to the Plaintiff by joining or leading in the queue or by adopting the attitude of wait and see?  I would say “none”.  I think the delay is only theoretical as the parties had to wait for an eventual pronouncement of the law by the Court of Final Appeal.  I agree with Mr Chan SC that the delay has to be balanced against commercial reality and the undesirability of proliferation of litigation on essentially the same point of law.  I would say the delay benefited both the Plaintiff and the 1^st named Defendant as indeed costs have been saved by watching a battle than taking part in it. 

24.  The law on adverse possession was in a state of confusion.  The confusion was first created by the 1973 Ordinance and then by the 1988 Ordinance which was enacted to dove-tail with the Sino-British Joint Declaration on the Question of Hong Kong.  The issues raised by the 1973 and 1988 Ordinances were as a result of the return of sovereignty of Hong Kong to the People’s Republic of China.  They involve a novel point of law in respect of which there were no precedents to follow and no comparables to rely on.  The issues, particularly that raised by the 1988 Ordinance, are unique.  They were resolved in favour of the Plaintiff by the Court of Appeal.  Though the decisions of the Court of Appeal were reversed on both occasions, the decisions of the Court of Appeal show that the position taken by the Plaintiff was not at all unreasonable.  Having regard to commercial reality and the uniqueness of the issues involved in this case, I find it excusable for the Plaintiff to have adopted a wait and see attitude.  It benefits the Plaintiff as well as the 1^st named Defendant in terms of costs.  It would have been more desirable if the Plaintiff had applied for a stay or informed the 1^st named Defendant of its intention to wait for resolution of the issues in dispute in some other cases.  But, in my view, the Plaintiff’s failure to do so is not fatal as I am satisfied that the intention was actually and genuinely held.  On balance, I am satisfied that the delay is excusable.

Serious prejudice

25.  In view of the above conclusion, there is no need for me to consider the issue of prejudice.  But I shall, nevertheless, consider if the delay is likely to cause or to have caused serious prejudice to the 1^st named Defendant, assuming that I was wrong in finding that the delay was excusable.

26.  Prejudice to the defendant may take different forms and the prejudicial effect of delay may depend in large measure on the nature of the issues in the case: see Trill and Another v Sacher and Others.  Prejudice to defendant is a matter of fact and degree.  Its importance depends upon the circumstances, the issues and other evidence that can be given.  The evaluation of the degree of prejudice caused by the delay requires the court to consider the context of such delay and the effect of the total lapse of time since the events giving rise to the dispute: see Hong Kong Civil Procedure 2008, paragraph 25/L/7.  The burden of proving serious prejudice rests squarely on the defendant.

27.  The 1^st named Defendant alleged that his mother and a number of his neighbours who were prepared to give evidence that he and his parents have been in exclusive occupation of part of the said Lot have died during the period of inactivity from October 1996 to March 2007.  Hence, but for the Plaintiff’s delay, those witnesses could have given evidence in support of his defence.  He referred to two deceased neighbours, namely Mr Wong Sum and Madam Hung Tor Lan and also the death of his mother, Madam Yuen Kwai. 

28.  However, Mr Wong Sum died on 11 July 1996 some three months before the close of pleadings in the present action.  He passed away long before the necessity of preparing his witness statement would arise.  I do not think any prejudice could have been caused by the Plaintiff’s delay.  Madam Hung Tor Lan passed away on 8 September 2001 at the age of 85 and Madam Yuen Kwai died on 10 March 2004.  Mr Chan SC submits that at the material time the law on adverse possession was favourable to the Plaintiff.  Hence, he submits that if the claim had been pursued with rigour and reached the Court of Appeal, it would likely to have been decided in favour of the Plaintiff along with Chan Tin Shi in 2004 and Harvest Good Development Limited in 2005, irrespective of Madam Hung’s and Madam Yuen’s evidence.  With respect, I do not agree.  What Mr Chan SC postulated might have been the situation.  However, if Madam Hung’s and Madam Yuen’s evidence would be the only evidence which the 1^st named Defendant could tender in support of his case of adverse possession, in the absence of their evidence, the 1^st named Defendant would be barred from having the would be decision of Court of Appeal reversed by the Court of Final Appeal.  But obviously, Madam Hung and Madam Yuen were not going to be the 1^st named Defendant’s sole witnesses on this issue.  The question is what prejudice would be suffered by the 1^st named Defendant for being short of those witnesses.

29.  Likewise, the 1^st named Defendant also alleged that another of his neighbours, Mr Tse Yam Fan and his wife are now respectively 81 and 76.  These and other potential witnesses have become aged during the delay.  Hence, Mr Shum submits that the 1^st named Defendant will no longer be able to rely on their corroborative evidence.  Again, the question is what prejudice would be suffered by the 1^st named Defendant because of the adverse effect on the quality of the evidence of Mr Tse and his wife because of the delay.

30.  Loss of a potential witness or adverse effect on the quality of the evidence which a witness is likely to give are prejudice.  The question is whether the prejudice is serious prejudice.  Prejudice to the defendant depends upon the circumstances, the issues and other evidence that can be given.  The evaluation of the degree of prejudice caused by the delay requires the court to consider the context of such delay and the effect of the total lapse of time since the events giving rise to the dispute.  I have dealt with the context of the delay above.  As for the evidence, the 1^st named Defendant’s pleaded case is that he, his parents and their family have been in exclusive occupation of part of the said Lot.  His case is that since his father purchased the portion of the said Lot from the previous squatter, his father and his father’s family members have been continuously residing, fish farming, poultry stock raising and cultivating on the land.  The 1^st named Defendant alleged that he has been continuously residing in the part of the said Lot since his birth in 1960.  He has five elder siblings who have also been residing there prior to 1960.  His case is not that apart from those five witnesses mentioned above, there are no other witnesses who could be called to prove adverse possession.  Insofar as the loss of Madam Hung and the 1^st named Defendant’s mother and the two aging witnesses are concerned, their evidence, if accepted, does not go beyond what the 1^st named Defendant and his elder siblings could testify.  What the 1^st named Defendant needs to prove is adverse possession since 1975 and not any earlier.  The 1^st named Defendant was fifteen in 1975 probably studying senior form in secondary school.  He must have clear memory of the events then to make him a competent witness.  In addition, if there is any truth in the 1^st named Defendant’s case, he must have other undisputable documentary records which could support his case, such as electricity deposit receipts and bills, telephone bills, water deposit receipts and bills, demand notes for rate, his own birth certificate and those of his siblings,his and his siblings’ school reports and above all records from the Registration of Persons Office when applying for identity card, to say just a few.  The 1^st named Defendant and his elder siblings are competent witnesses.  The 1^st named Defendant has not asserted that apart from Madam Hung, Madam Yuen, Mr Tse and his wife, there are no other neighbours who could give corroborative evidence.  On my analysis, the 1^st named Defendant would not be short of competent witnesses and contemporaneous documentary evidence. 

31.  In addition, Mr Chan SC submits that there are aerial photographs taken by the Survey & Mapping Office of the Hong Kong Government since 1963 and survey maps prepared from those aerial photographs, which would provide an independent source of corroborating evidence.  The 1^st named Defendant argued that the survey maps were not intended to be exhaustive in showing details of what was in fact on the land, particularly in terms of residential or agricultural activities in question while the aerial photographs had to be looked at and interpreted by an expert surveyor.  Mr Chan SC submits that the aerial photographs and survey maps are public records of the result of surveys of land conducted by the Survey & Mapping Office.  The 1^st named Defendant’s argument that being a layman he is not in a position to interpret the contents of the aerial photographs is besides the point.  The contents of the aerial photographs speak for themselves.  In respect of the aerial photographs, the question is not whether the 1^st named Defendant is prejudiced by an absence of evidence but what is the proper interpretation of the available evidence.  The answer to the 1^st named Defendant’s complaint is that should the matter go to trial, it is open to him to adduce expert evidence on the interpretation of the aerial photographs.  There is nothing to suggest that the interpretation of those aerial photographs would be hampered by the passage of time.  But if the 1^st named Defendant does not intend to rely on those aerial photographs and survey maps, it is a matter for him. 

32.  I accept that the Plaintiff’s delay has deprived the 1^st named Defendant of the luxury of the evidence of Madam Hung and Madam Yuen and may have an effect on the quality of the evidence of Mr Tse and his wife.  But the 1^st named Defendant is not short of competent witnesses and contemporaneous documentary evidence which could support his case.  Having regard to the context of the delay, the nature of the Plaintiff’s and the 1^st named Defendant’s case, I am far from being satisfied that the prejudice caused by the Plaintiff’s delay is serious prejudice.

The counterclaim

33.  Mr Chan SC submits that if the 1^st named Defendant were right that he was seriously prejudiced in his defence against the Plaintiff’s claim as he was no longer able to prove adverse possession, his counterclaim would constitute an abuse of process of court and should be struck out because on the 1^st named Defendant’s own admission he would not be able to prove his case.  Alternatively, Mr Chan SC submits that the 1^st named Defendant is equally under an obligation to prosecute his counterclaim with due diligence and his failure to take out a summons for directions one month after the close of pleadings coupled with the absence of explanation for his inaction should justify the court to have his counterclaim struck out for want of prosecution.  I am not impressed by that submission.  In view of my findings above and the conclusion I am going to reach, I do not find it necessary to consider Mr Chan SC’s submission on striking out the 1^st named Defendant’s counterclaim.  In any event, no formal application has been made for striking out the 1^st named Defendant’s counterclaim.

Conclusion

34.  Despite the inordinate delay of ten years since the close of pleadings, I find the delay is excusable.  But even if it were not, I am satisfied that the delay is not likely to cause or to have caused serious prejudice to the 1^st named Defendant.  Accordingly, the appeal must be allowed and I make the following order:

(1) the Order made by Master Lung on 25 January 2008 be set aside;

(2) the 1^st named Defendant’s Summons dated 21 May 2007 be dismissed; and

(3) the costs of and occasioned by this appeal, including the costs of the 1^st named Defendant’s Summons dated 21 May 2007, be costs in the Plaintiff’s costs in the cause, while the 1^st named Defendant’s own costs be taxed in accordance with Legal Aid Regulations.