XCHRX EE KIN YAN t/a KIN SHING ENGINEERING CO. v. HONEYWELL LTD.

HCCT8/1995

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

CONSTRUCTION AND ARBITRATION LIST NO.HCCT 8 OF 1995

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J U D G M E N T

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1. By this application the defendant seeks an order that the action be dismissed for want of prosecution because the plaintiff has been responsible for inordinate and inexcusable delay in proceeding with the action and that serious prejudice to the defendant has thereby resulted. If the application is granted it will be the end of the action because the limitation period has expired and the plaintiff will not be able to commence fresh proceedings.

2. The fundamental principle to be applied in such applications is found in Birkett v. James (1978) AC 297 :

"....the power of the court to dismiss an action for want of prosecution should be exercised only where the plaintiff's default had been intentional and contumelious or where there had been inordinate and inexcusable delay on his or his lawyers' part giving rise to a substantial risk that a fair trial would not be possible or to serious prejudice to the defendant."

3. The three questions to be addressed in this case are :

(a) has there been inordinate delay?

(b) if so, was such inordinate delay inexcusable?

(c) if so, will such inordinate and inexcusable delay

(i) give rise to a substantive risk that it is not possible to have a fair trial of the issues in the action or

(ii) be likely to cause or to have caused serious prejudice to the defendants?

Firstly therefore it is necessary to examine, albeit briefly, the delays of which the defendant complains.

4. The writ was issued in October 1994 and concerned a contract which was part oral and part written in July 1991. The defence was filed within two months, in December 1994 and clearly identified the main issue between the parties, namely whether the contract was a lump sum contract (in which case the plaintiff's claim for additional works would be likely to fail) or a re-measurement contract (in which case the plaintiff would succeed wholly or in part.) The defendant had paid the plaintiff almost $3 million under the contract. The plaintiff is claiming a further sum in excess of $3 million for additional works.

5. The initial pleadings were mercifully brief and the issues relatively uncomplicated for a construction case.

6. In outline, the defendant points to the following matters, all of which, they say, are matters for which the plaintiff should carry the blame, which, cumulatively add up to inordinate delay.

(1) In January 1995 the plaintiff issued a Summons for Directions which was obviously premature and had to be vacated by consent.

(2) From January 1995 to October 1995 no steps to continue the action were taken by the plaintiff. The explanation given for this inaction was two-fold. Firstly the plaintiff was asking the Legal Aid Department if their legal aid certificate covered mediation. They learnt that it did not in April 1995. However they did not inform the defendant of Legal Aid's decision until October 1995 as a result of the defendant inquiring of them. Secondly, the parties (not their solicitors) were trying to negotiate a settlement of the matter. No settlement was reached. It should not have taken over six months to realize that the matter would not settle.

(3) Between October and December 1995 the parties filed their lists of documents -  the defendant inspected the plaintiff's list two weeks after it was filed. However the plaintiff did not inspect the defendant's list until nine months after filing in June 1996. Moreover the plaintiff issued a second premature summons for directions prior to the defendant's list of documents being filed which again was vacated by consent.

(4) Between December 1995 and September 1996 no steps to continue the action were taken by the plaintiff. Again the explanation for this delay was that the parties themselves were trying to reach a settlement. They had failed to settle in 1995. How could another nine months have been spent negotiating?

(5) Between September and December 1996 the plaintiff inspected the defendant's documents and requested some more which were supplied in December 1996.

(6) Between December 1996 and June 1997 the plaintiff was searching for and locating more of its own documents so as to file a supplemental list. Thus it had taken the plaintiff from September 1996 to June 1997 to perfect its own list.

(7) The defendant contends that between September 1997 and March 1998 no progress was made as far as they were concerned. The plaintiff says that they were preparing their case by, for example, getting authorization from Legal Aid to have documents translated and to instruct an expert witness and having a conference with counsel.

(8) In April 1998 the defendant issued a request for further and better particulars. Five months later the plaintiff filed an amended Statement of Claim and their answers to the defendant's request of April. Five weeks later the defendant's wrote saying the answers were not satisfactory together with a request for further and better particulars of the amended Statement of Claim.

(9) Complete silence followed for 11 months. After 12 months, on 21 October 1999 the defendant issued this summons. The next day the defendant received the further and better particulars (the defendant contends these answers are also unsatisfactory which the plaintiff denies).

7. Looking at the matter as a whole I accept the defendant's contention that the plaintiff is the party who should bear the blame for these delays. It is the plaintiff's case and it is for them to pursue the matter expeditiously. The serious periods of inaction above (that is inaction as perceived by the defendant because as far as they were concerned, the matter seemed to have gone to sleep during these periods) add up to inordinate delay. (2) is nearly 10 months, (4) is nine months, (6) is seven months, (7) is seven months, (8) is five months and (9) is 11 months. Of course the court accepts that these were not always periods of complete idleness but they were delays in the sense that no progress was made and no steps to prosecute the claim were taken.

8. The plaintiff contends that during these period there is also an onus on the defendant. They should not merely sit and wait for something to happen. This argument is not without some force even though it is not in accordance with the views expressed by Lord Salmon in Birkett v. James :

" These delays had become a blot on the administration of justice for it is of great public importance that actions should be brought to trial with reasonable expedition. Defendants' solicitors might no doubt have taken out applications to dismiss for want of prosecution or for peremptory orders to compel the plaintiffs to get on with their actions. Not unnaturally they rarely did so, relying on the maxim that it is wise to let sleeping dogs lie. They had good reason to believe that a dog which had remained unconscious for such long periods of time might well die a natural death at no expense to their clients; whereas, if they were to take the necessary steps to force the action to trial, they would merely be waking up a dog for the purpose of killing it at great expense to their clients which they would have no chance of recovering. Accordingly it was unusual for summonses to dismiss actions for want of prosecution or for peremptory orders to be taken out. I do not think that defendants' solicitors can be blamed for this practice nor that the plaintiffs or their solicitors should be entitled to derive any benefit from it."

9. I do not consider it good practice to do absolutely nothing as a defence solicitor. They are under a duty to their client to keep the action under constant review and take such action as is necessary in their client's interest. Looking at the matter as a whole, I am satisfied that the defence solicitor did not fail in that duty in this case.

10. Before leaving the question of the defence solicitor's conduct, I must consider whether they have waived or acquiesced in any of the periods of delay because if so, they cannot rely on them in support of this application. Mr Yeung, counsel for the plaintiff, did not point to any particular conduct by the defendant which could be construed as waiver or acquiescence. Mr Cocking for the defendant positively contended that there were no such acts. I am satisfied that the defendant did not at any time acquiesce to the unacceptable delays which have been outlined.

11. Given that the delays have been the plaintiff's responsibility, the court can and does look at the cumulative effect and take an overall view as to whether the delays are inordinate. In terms of construction cases, it has never been a difficult or complex case either legally or factually. It is now nearly nine years since the contract was formed and nearly seven years since the work was completed and the differences between the parties first emerged. There can be no doubt that the delays have been inordinate.

12. Are they excusable? In most cases any delay that is inordinate is almost certain to be inexcusable. In this case the plaintiff has contended that taken individually, each period cannot be regarded as inordinate. That contention fails once it is open to the court to consider them cumulatively. As to the excuses offered, they generally amount to explanations rather than good excuses. For example trying to settle, seeking legal aid approval to do something, instructing counsel, searching for documents, preparing the case and so on. These do not constitute excuses of sufficient weight to justify the delays and thereby refuse the defendant's application.

13. One period of delay however requires separate consideration. The final period was some 11 months in which virtually nothing happened. Mr Cocking described it as the "final straw" which prompted this application. He stated, quite fairly, that at the time when things ought to have been speeding up, they in fact slowed down to a complete standstill. Mr Yeung informed the court that part of the explanation for this delay was the serious medical condition of two members of his immediate family. Naturally, both the court and Mr Cocking accepted this as a fact. Unfortunately, however, this explanation had never been advanced before either in correspondence at the time or prior to the hearing. With some difficulty I have come to the conclusion that this explanation or excuse does not dilute the strength of the defendant's submission. Mr Yeung's unfortunate personal circumstances did not account for the whole of the period, only the latter part of it and the availability of Mr Yeung was not the vital link in the chain of progress. The solicitors should have either taken alternative steps or, at least, alerted the defendant's solicitors to the cause of the delay. On any view it cannot excuse the 11 months' delay.

14. I have then come to the overall conclusion that the totality of the inordinate delays are inexcusable. The final question remains, which must be answered in the affirmative if the defendant is to succeed on this application, is will the delay cause serious prejudice to the defence or does it give rise to a risk that a fair trial is not possible?

15. The approach to be adopted when answering this question is as stated by Neill LJ in Trill v. Sacher [1993] 1 AER 980 :

" (11)Prejudice to the defendant may take different forms. In many cases the lapse of time will impair the memory of witnesses. In other cases witnesses may die or move away and become untraceable.

(12)The prejudicial effect of delay may depend in large measure on the nature of the issues in the case. Thus the evidence of an eye witness or of a witness who will testify to the words used when an oral representation was made is likely to be much more seriously impaired by the lapse of time than the evidence of someone who can rely on contemporary documents. A defendant may also suffer some prejudice from prolonged delay in an action which involves imputations against his reputation, though this factor by itself is unlikely to provide a ground for striking out.

(13)when considering the question of prejudice and, if it is raised, the question whether there is a substantial risk that it will not be possible to have a fair trial of the issues in the action, the court will look at all the circumstances. It will look at the periods of inordinate and inexcusable delay for which the plaintiff or his advisers are responsible and will then seek to answer the questions : has this delay caused or is it likely to cause serious prejudice, or is there a substantial risk that because of this delay it is not possible to have a fair trial of the issues in the action? As Slade LJ stressed in Rath's case [1991] 3 All ER 679 at 688, [1991] 1 WLR 399 at 410 :

'.... a causal link must be proved between the delay and the inability to have a fair trial or other prejudice, as the case may be.'"

16. It is important therefore to consider the nature of the issues which the court will have to resolve. Mr Yeung contends that the oral part of the contract only represents a small part of the contract and the real issues will be determined on the documents, particularly the purchase order and later memos. I cannot accept this. At issue is the very nature of the contract which was partly oral. The parties are and always have been at odds as to the nature of the agreement. If, as Mr Yeung contends, the matter can be resolved substantially on the documents, it presupposes that the documents are agreed as to their effect and meaning. There is no such consensus. Not only will oral evidence be necessary on the issue of the oral part of the contract, it with also be necessary on the construction of the key documents. The reality is that the outcome of this trial would very likely depend on the judge's assessment of the witnesses' credibility and the reliability of their memories.

17. In these circumstances the defence faces two difficulties, the combined effect of which, in my judgment, creates a real risk of an unfair trial and will cause prejudice to the defence. Firstly, it is dangerous to rely on evidence which is recounting events that occurred 10 years ago. (By the time the matter eventually comes on for trial, it could well be 11 years). Secondly, two of the defendant's three key witnesses are abroad and contact has been lost. It is also said that the third key witness might now be a reluctant witness but I place little weight on this contention.

18. In conclusion I am satisfied that if these proceedings continued, albeit at a faster pace than hitherto, it would not come on for trial until some time during 2001. I am satisfied that faced with that prospect, the defendant would be quite unable to do justice to it's case and the judge would be faced with a most difficult if not impossible task.

19. For all the above reasons, I grant the application as sought by the defendant in their summons dated 21 October 1999.