WING FAI CONSTRUCTION CO LTD (In Liquidation) v. CHENG KIT YIN KELLY AND OTHERS

HCA833/2004

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

ACTION NO. 833 OF 2004

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D E C I S I O N (No. 2)

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Introduction

1.  The background circumstances of the present proceedings can be seen in the Decision that I handed down on 9 December 2005.  I shall not repeat them here save to note that since June 2009, only Mr Nicholas Hill has remained as the sole liquidator of the plaintiff.  By that Decision, I ordered the plaintiff to provide security for costs of HK$800,000 by paying the same into court within 14 days from the order and stayed the proceedings pending the payment into court (“the 2005 Order”).

2.  The plaintiff did not comply with the 2005 Order. Since then, it had taken no further step in the proceedings at all.

3.  On 18 January 2010, after a lapse of more than four years, the plaintiff’s current solicitors filed a notice of intention to proceed.  On 17 February 2010, the plaintiff applied for leave to pay the security out of time.  On 23 February 2010, the 1^st defendant applied to dismiss the action for want of prosecution and or as being an abuse of process.  In March 2010, the 4^th and 5^th defendants took out similar applications for dismissal of the action.

4.  The applications first came before me on 24 May 2010.  In the course of the hearing, the plaintiff applied for an adjournment to file further evidence to deal with certain apparent deficiencies in its evidence.  I allowed the application with costs. Since then further evidence has been filed by the parties.

The extension application

5.  I now turn to the plaintiff’s application for time.

6.  The burden lies squarely on the plaintiff to satisfy the court why the court should exercise the discretion in its favour.

7.  I first look at the length of the delay.  It is beyond doubt that the delay since December 2005 is inordinate.

8.  I next consider if there is any reasonable excuse. What the plaintiff has put forward is, in gist, this.  As at December 2005, the plaintiff simply did not have sufficient funds to provide the security for costs.  That remained the situation until April 2007 when the liquidators recovered some HK$700,000.  By then the plaintiff could have provided the security, albeit out of time, but was unable to finance the action any further.  So it decided not to provide the security but applied its resources to other, presumably, more promising actions, including its claims against the 3^rd defendant.  In August 2009, some HK$1.8 million was recovered from the 3^rd defendant, which enabled the plaintiff to provide the security and to continue with this action and other outstanding actions.  To borrow the description used by its counsel, Mr Bartlett, the plaintiff now has “the fighting fund”.  After some without prejudice negotiations with the defendants which yielded no fruitful result, the plaintiff filed the notice of intention to proceed in January this year and the present application one month later.

9.  The defendants have leveled criticisms at the plaintiff’s evidence.  I do not think I need to dwell on them.  For even taking the plaintiff’s case at its highest, it does not amount to any reasonable excuse.  The plaintiff’s decision not to provide security for costs in April 2007 when it was able to do so, coupled with its application of its resources then available to other actions, is clearly a deliberate commercial decision (a) to continue to act in breach of the 2005 Order and (b) not to continue with the present action for the time being until it was financially able to do so.  Now it says it has the money to continue with the present action and should be allowed to do so.  The plaintiff is effectively saying, “I can choose and decide when to suspend or continue with the action depending on my resources from time to time.”  It is tantamount to warehousing the action.  Litigation cannot be conducted in such manner.  The inordinate delay is in my view inexcusable.

10.  For the above reasons, the plaintiff’s application must fail.

11.  Mr Bartlett submitted that prejudice is still a relevant consideration and the defendants have failed to demonstrate there is any in the present case.  As I have observed during the course of submissions, the absence of any prejudice does not necessarily work in favour of the plaintiff applying for time when there is inordinate and inexcusable delay. After the CJR, as well as before it, the court expects the parties to expedite the proceedings with due diligence.  When the procedural default on the part of a party involves a breach of a court order coupled with inordinate and inexcusable delay, the court will be most reluctant to grant any further time to the defaulting party unless there exist strong justifications.  The mere absence of prejudice to the other party is not sufficient.

12.  Since the plaintiff’s application fails, the stay imposed by the 2005 Order continues to operate.  The practical effect is that the present action is permanently stayed.  In order to achieve finality, I will exercise my discretion to dismiss the action against the 1^st, 4^th and 5^th defendants.

The dismissal applications

13.  What I have said above is sufficient to dispose of the matters now before me.  I will therefore very briefly deal with the defendants’ applications for dismissal.  I disagree with their submission that on the materials before me, the plaintiff’s case is wholly unmeritorious. However, for the matters relied on by them, I agree that they have suffered prejudice as a result of the plaintiff’s delay.  So I will allow their applications as well and dismiss the action against them for want of prosecution.

14.  I will now hear the parties on costs.

[Submissions on costs]

15.  Costs should follow the event.  I will order the plaintiff to pay the 1^st, 4^th and 5^th defendants costs of the action including the costs of all the applications before me, to be taxed if not agreed.