THE HONGKONG AND SHANGHAI BANKING CORPORATION LTD. v. KUAN TAO SHENG and Others

1990, No.A6152

IN THE SUPREME COURT OF HONG KONG

HIGH COURT

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REASONS FOR JUDGMENT

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1. The Plaintiff commenced these proceedings against the Defendants as guarantors for the debts of Engstrong Limited ("Engstrong"), to the extent of $166 million plus interest. At all material times, the 1st and 2nd Defendants were in partnership with Engstrong in a textile business trading under the name of Texxon & Co. ("Texxon"). The 1st and 2nd Defendants jointly owned a two-third interest in the partnership, whilst Engstrong owned the remaining one-third interest through a shell company, the 3rd Defendant herein. Engstrong was beneficially owned by Yue Xiu Enterprises Limited ("Yue Xiu"), which was the official representative of Guangzhou Municipality in Hong Kong. The 1st Defendant was the chairman of the board of directors and the 2nd Defendant was the managing director of the 3rd Defendant. The 2nd Defendant is the son of the 1st Defendant. The guarantee in question was only one of a series of financial transactions between the various parties in a scheme of corporate restructuring in preparation for the partnership going public. In the event, the scheme failed and the 3rd Defendant went into voluntary liquidation. Engstrong was unable to repay the debt resulting in these proceedings against the guarantors.

2. The cause of action arose on 14 August 1990, and the writ with the statement of claim endorsed was issued on 8 September 1990. The 1st and 2nd Defendants filed their defences on 12 October 1990. The 3rd Defendant did not file any acknowledgement of service and took no part in these proceedings at all. On 30 August 1996 and 2 September 1996, summonses for striking out the Plaintiff's claim for want of prosecution were taken out by the 1st and 2nd Defendants respectively. It was alleged by both Defendants that the Plaintiff had been guilty of inordinate and inexcusable delay in the prosecution of these proceedings that had brought irremediable prejudice to them rendering a fair trial of the action impossible. The Plaintiff, though admitting there had been delay in prosecuting the action, submitted that such delay was not inordinate or inexcusable. In any event, the Plaintiff submitted, no prejudice was or could be suffered by any of the two Defendants. The Plaintiff further submitted that as a matter of law since the Plaintiff had not been guilty of any further delay after the expiry of the limitation period, delay occurring before that date ought not be taken into account in an application to strike out for want of prosecution.

The Four Periods of Delay

3. Four periods of delay had been identified by the parties, and they were:-

(a) between 12 October 1990 and 17 December 1991 - for about 15 months;

(b) between 7 January 1992 and 30 October 1992 - for almost 10 months;

(c) between 7 October 1993 and 1 October 1994 - for almost 12 months; and

(d) between December 1994 and 30 July 1996 - for about 19 months.

4. In between the said four periods of delay, and from time to time, further steps were taken by the parties in the proceedings. The writ was amended in August 1991. A notice of intention to proceed was filed on 6 November 1991. The Plaintiff obtained leave to amend the statement of claim on 7 January 1992. Further and better particulars of the 2nd Defendant's defence were filed in June 1992 subsequent to the Plaintiff's request made a month before that. Reply to 2nd Defendant's defence was filed in October 1992. On 30 October 1992, summons for directions was taken out by the Plaintiff. On 20 November 1992, an order was made for exchange of lists of documents. The Plaintiff did not file its list of documents until 25 May 1993. The 2nd Defendant did not file his list until a month later, on 30 June 1993. The 1st Defendant only filed his list of documents on 22 July 1993, after the Plaintiff obtained an order from the master to compel him to do so. A supplemental list was filed by the Plaintiff in October 1993. In October 1994, the Plaintiff applied to re-amend the amended statement of claim and filed a notice of intention to proceed. In December 1994, the re-amended statement of claim was filed pursuant to leave grant in the same month. On 22 December 1994, the 2nd Defendant amended his defence. On 30 July 1996, a third notice of intention to proceed was filed by the Plaintiff. Immediately upon the expiration of the one month period after the notice, and on 30 August 1996, the 1st Defendant took out the present summons for striking out. This was followed by the 2nd Defendant's application on 2 September 1996. On 11 September 1996, the Plaintiff took out a summons for further directions which was adjourned to be heard together with the Defendant's striking out applications.

Need for further delay after expiry of limitation period

5. The Defendants submitted that notwithstanding the principle laid down by the House of Lords in Birkett v. James [1978] A.C. 297, the court could and should take into account post-writ and pre-limitation delay immediately upon expiry of the limitation period. It was submitted that even if the Plaintiff had not been guilty of further delay after the limitation period, the Defendants would then be entitled to rely on delay that could not be relied on as effective delay during the limitation period. The Plaintiff submitted otherwise, and contended further culpability had to be shown before the Defendants can take advantage of such historic delay.

6. Reliance was placed by the Defendants on two English Court of Appeal decisions in support of their said submission. The first case was Rath v. Lawrence [1991] 1 W.L.R. 399, a decision that relied on the majority decision of the Court of Appeal in Hollis v. Islington London Borough Council (unreported), judgment dated 27 January 1989. The headnote of the report summarised the ratio as, inter alia, "That although time lapsed before the issue of a writ within the limitation period could not of itself constitute inordinate delay such as to justify dismissal of the action, once a writ had been issued the Plaintiff was bound to observe the Rules of the Supreme Court and proceed with reasonable diligence; that, accordingly, the inordinate and inexcusable delay by the plaintiffs within the limitation period could be relied upon to support the defendants' applications to strike out after the expiry of the limitation period". The second case was Trill v. Sacher [1993] 1 W.L.R. 1379. The ratio, as summarised by the headnote, was, inter alia, "That although the first two periods of delay by the plaintiffs could not have been relied on by the defendants if they had made their application to strike out before the expiry of the limitation period, since the third period of delay had occurred after the expiry of the limitation period the court was entitled to have regard to all three periods and to determine that there had been inordinate and inexcusable delay on the plaintiffs' part".

7. The starting point of the debate must be the case of Birkett v. James, supra. In that case, the plaintiff issued the writ therein in July 1972. The case proceeded with reasonable diligence until June 1973 when an order for trial of a preliminary issue was made. Thereafter the plaintiff failed to set down the preliminary issue for trial. Nothing was done until July 1975 when the plaintiff gave notice of intention to proceed. In October 1975, some months before the expiry of the limitation period, the defendant applied to strike out the claim. The first fundamental principle laid down by the House of Lords was that the power of the court to dismiss an action for want of prosecution should only be exercised : (1) where the plaintiff's default had been intentional and contumelious; or (2) where there had been inordinate and inexcusable delay on his or his legal representatives' part giving rise to a substantial risk that a fair trial would not be possible or to serious prejudice to the defendant. This dual ground for the exercise of the court's discretion has since become settled law. The second important principle laid down by the House was that a plaintiff whose action was dismissed for want of prosecution before the limitation period had expired was, save in exceptional cases, entitled to commence fresh proceedings for the same cause of action; and thus, the power to dismiss an action for want of prosecution, apart from a case of contumelious conduct on the part of the plaintiff, should not ordinarily be exercised during the limitation period, as it would otherwise have only aggravate the prejudice to the defendant from delay and add to costs. This immensely sensible principle based on common sense and practicality has also been well entrenched in our law.

8. It was, therefore, abundantly clear that it would not be open to the Defendants to rely on any delay on the Plaintiff's part before the expiry of the limitation period on 13 August 1996 if the applications were taken out before that date. All relevant periods of alleged delay herein occurred within the currency of the limitation period, save an alleged further period of delay of 11 days between 1 and 11 September 1996 which I shall deal with later. Why then should the Defendants be able to rely on such delay by waiting for the limitation period to expire and immediately took out a striking out application after that date without the Plaintiff being guilty of any further delay? Should the expiry of the limitation perse be sufficient to resuscitate ineffective delay before that event?

9. In Birkett v. James, the court readily recognised the strength of the concession made by the legislature to a plaintiff in allowing a period of time for him to commence legal proceedings against the defendant. The court also recognised the defendant's inability to complain of delay and prejudice within the currency of this period. The two subsequent Court of Appeal decisions were an attempt to open an inroad to this hitherto "unquestionable right" of the plaintiff to delay within this statutory period of grace. It was proclaimed by the Court of Appeal in those two decisions that post-writ and pre-limitation delay could be held against the plaintiff on the basis that once the plaintiff invoked the jurisdiction of the court he had submitted himself to the control of the court and its rules that stipulated for diligent prosecution of proceedings. There laid the distinction with a case where the plaintiff's delay was pre-writ. The plaintiff must proceed with his action diligently upon issuance of the writ. The ground for legitimacy of reliance on post-writ and pre-limitation delay was held to be the expiry of the limitation period. In other words, upon expiry of the limitation period if the Plaintiff's action was struck out for want of prosecution, no fresh proceedings for the same cause of action would be possible. By then the common sense and practicality that founded the court's helplessness against dilatory plaintiffs would cease to have any legitimacy.

10. It was observed by Stuart-Smith L.J. in Hollis v. Islington London Borough Council, supra, that there could be :-

"No warrant for equating the effect of prejudice due to delay which inevitably is caused by permitted and non-culpable delay in issuing proceedings, with prejudice caused by culpable delay, even though the right to strike out has not yet arisen because the limitation period has not expired. In the one case the delay is permitted and therefore the prejudice caused by it is inevitable and must be accepted. In the other it is not permitted; on the contrary, it exceeds by definition the time permitted by the rules; prejudice is not inevitable and should not be accepted".

11. Farquharson L.J., in Rath v. Lawrence, held at page 406 that :-

"The position of the Plaintiff who has delayed the issue of his writ until the last moment of the limitation period is, it is true, in one sense more advantageous than that of the Plaintiff who issues his writ without delay. The former has exploited the period given to him by Parliament to the fullest extent, and cannot be criticised unless he is guilty of further delay after the limitation period has expired. The position of the latter is, however, quite different. Once the Plaintiff has issued his writ and set the treadmill of litigation into motion, he is bound to observe the rules of the court. If he flout them to the extent that the plaintiffs have in the present case I can see no reason why the defendants should not rely upon it, after the limitation period has expired, to support an application to strike out (emphasis added)."

12. Prima facie, such logic appeared to be flawless. However, upon close scrutiny of the Court of Appeal decisions, it was abundantly obvious that such logic must be subject to the overriding principle of fairness, which is what justice is about after all.

13. I am convinced that the said Court of Appeal decisions never intended to erode the principle in Birkett v. James in such general swiping manner as suggested by the Defendants. The case of Hollis that give birth to the said proposition of law concerned culpable delay both before and after the limitation period. It was for this feature that Purchas L.J. founded his dissenting views. He said :-

"It is at this point that I have the misfortune to differ from the view, as I understand it, expressed by Stuart-Smith L.J., namely that it is not necessary for a defendant to establish any additional prejudice arising during the post-limitation period of culpable delay in order to sustain an application to strike out for inordinate delay. On the one hand where all the prejudice has already been suffered by a defendant caused by delay during the limitation period, it is difficult to see why a defendant should be in a stronger position to strike out the action on the basis that inordinate delay has prejudiced the chances of a fair trial than he would have been during the limitation period itself, which it is accepted he cannot do otherwise than by applying to strike out on the grounds of contumelious conduct in the plaintiff's failure to comply with a peremptory order. Again, it is equally difficult to justify why the plaintiff, who has delayed the issue of his writ until the eleventh hour and thereby caused substantial prejudice to the proposed defendant, should be in a better position than a plaintiff who has issued his writ expeditiously but has delayed over the same period of time causing the same degree of prejudice but has achieved this result by failing to pursue his action without being guilty of contumelious conduct. This would set a premium on the late issuing of writs. On the other hand, it is just as difficult to justify why a plaintiff, having issued his writ in time but thereafter been guilty of inordinate delay causing substantial prejudice to the defendant, should be allowed to continue with his delay after the end of the period of limitation with impunity providing he can establish that no further prejudice has been occasioned to the defendant thereby."

14. Similarly, in Rath v. Lawrence, there was also a further period of delay, albeit of a "minimal kind", after the limitation period. Thus when Farquharson L.J. reached his decision in the concluding words of the passage above quoted, his reference to the plaintiff flouting the rules to "the extent" he did, he was echoing his earlier conclusion that "it was not suggested that there was any further delay, except of a minimal kind, on the part of the plaintiffs after the latter date (i.e. expiry of limitation period). Accordingly, the delay complained of took place almost exclusively during the limitation period". Slade L.J. also accepted the short period of delay occurring after the expiry of limitation period. He further refused to accept the admittedly forceful submission made on behalf of the plaintiff without really giving any reason therefor. The plaintiff's submission was succinctly summarised by the judge as - in cases where all, or almost all, the relevant prejudice has already been suffered by a defendant during the limitation period, it is, in his submission, anomalous, illogical and unjust that (a) a defendant should very shortly after the expiration of the limitation period be in a stronger position to strike out the plaintiff's action than he would be during the limitation period when, save in exceptional circumstances, he could not obtain such an order; (b) a plaintiff who has delayed the issue of the writ to the eleventh hour and thereby caused substantial prejudice to the defendant should be in a better position than the plaintiffs in this case. Nor did the judge deal with the dissenting judgment in Hollis when he accepted the majority decision therein.

15. Refusal to accept the correctness of the minority decision in Hollis and a rejection of the plaintiff's submission in Rath v. Lawrence can be justified by a consideration of the effect of further culpable delay after expiry of limitation period that existed in both cases. The ineffective delay of which the Plaintiff was guilty, but that the Defendant could not relied upon during the currency of the limitation period, was resuscitated by the further post-limitation delay. At the time of the commission of post-limitation delay, the obstacle that prevented any consideration of pre-limitation delay had disappeared, it was therefore open to the court when considering post-limitation delay to take an overall view of all periods of delay, before and after limitation. The post-limitation delay could and should then be considered as an extension or continuation of pre-limitation delay; accordingly, it would be wrong and unduly restrictive to attempt to compartmentalise the post-limitation delay. Both periods of delay together form the full body of delay. There is no justification to consider only the tail end and not the whole body. In other words, historic delay occurring within currency of limitation period can be triggered and regained its full effectiveness by post-limitation delay. The Plaintiff could not be heard to complain about the unfairness referred by the dissenting judgment because the Plaintiff had committed further acts of culpability.

16. To hold otherwise would bring absurdity to the law. Take the example of the plaintiff who had diligently commenced proceedings shortly after the cause of action arose, but had been guilty of culpable delay thereafter for three years. Then the plaintiff truly repent and proceeded thereafter with all due diligence. Where is the justice to penalise such a plaintiff by permitting the defendant to wait for a further three years for limitation period to expire to strike out the claim? Why should the defendant be permitted to rely on delay that had become history in the absence of subsequent culpability on the part of the plaintiff? To hold otherwise would be haunting the plaintiff for the remainder of the limitation period with past misconduct. The plaintiff would be discouraged from correcting his wrong if his claim could be struck out for his past wrong notwithstanding his repentance. The "sleeping dog" principle required revisiting in the light of the modern approach of proactive case management. Even under the "sleeping dog" principle, if the inaction of the defendant amounts to passive encouragement, it would be a matter the court would take into account in a striking out application. I believe the time has come for this rider to be taken a step further. It is hardly conducive to the proper administration of justice to encourage defendants to sit back and allow delay to continue, and be entitled after years of such waiting to strike out the plaintiff's claim. The rules permit the Defendants to force the Plaintiff out from his inaction. Lord Woolf in his lecture to Hong Kong practitioners in 1966, titled "A new approach to civil justice", spoke of the "equality principle". It is only reasonable to require all parties, and not just the Plaintiff, to ensure the case is handled and completed expeditiously. No doubt a plaintiff has the primary obligation in the carriage of the action, however, such feature should not be over-emphasis to the extent of giving complete immunity to the defendant in this regard. Defendants should, in my view, be discouraged from sitting back for years and take advantage of a delay to which they should be partly responsible by refraining from exercising their rights under the rules to ensure no delay could be committed. However, the above views on the propriety to maintain the "sleeping dog" principle in its full rigour has no effect on the conclusions I reached herein.

17. The Plaintiff's submission was not only supported by the fact of the existence of further delay in the authorities relied on by the Defendants, it was also accepted by the Court of Appeal in Trill v. Sacher. In that case, the Court of Appeal specifically posed the question in issue in the present case. There were three periods of delay, two within the currency of limitation period, and the last after expiry of limitation period. Gildewell L.J. thus pose the following issue :-

"The question therefore arises, as a result of the third period of delay, should the court now take account of all three periods in deciding whether to strike out (emphasis added)?"

18. The court answered affirmatively after considering Rath v. Lawrence. I am satisfied that the said Court of Appeal decisions should be explained on the more limited basis of further culpable post-limitation delay forming the justification for reliance on pre-limitation delay. This constituted the only way such decisions could sit well with the principles laid down in Birkett v. James. This was the only manner to resolve the logical dilemma posted against a post-limitation right to rely on historic delay that could not be relied upon pre-limitation. Without change of circumstances, i.e. the occurrence of further culpable post-limitation delay, the sudden coming into existence of a hitherto non-existing right on the stroke of midnight of expiry of limitation could not be logically explained nor morally justified. I hold such further post-limitation culpable delay, albeit may be minimal delay of no great significance on its own, to be a pre-condition to bring any pre-limitation delay into operation.

19. It was alleged by the Defendants that there was further culpable post-limitation delay in the present case. The last notice of intention to proceed was filed on the eve of court vacation on 30 July 1996. Pursuant to the rules, no further steps could be taken by the Plaintiff before the expiration of one month after that date. Half-way into that one month period, limitation period expired on 13 August 1996. Immediately upon the expiry of the one month period, the first of the two striking out applications was filed. The first step in the action taken by the Plaintiff after the expiry of limitation was the issuance of the summons for further directions on 11 September 1996. The Plaintiff submitted that the issuance of that summons was irrelevant consideration as by then both Defendants had already applied to strike out the Plaintiff's claim. I agreed that upon issuance of the striking out applications, the Plaintiff could not be blamed for any inaction pending a determination of the Defendants' applications. It would be a waste of efforts and costs for the Plaintiff to act otherwise in the event of a successful striking out of its claim. Ignoring any period after 30 August 1996 when the first striking out application was issued, there could be no period of time for consideration at all after expiry of limitation on 13 August 1996 and before the issuance of the said application. No complaint can be laid against the Plaintiff for any culpable delay as the rules prohibits the Plaintiff from taking any further step before 30 August 1996. In the premises, no time could have lapsed for the Plaintiff to commit any further delay post-limitation and pre-application for striking out. I therefore held that the Plaintiff was not guilty of any post-limitation culpable delay to entitle the Defendants to rely on any post-writ and pre-limitation delay, whether culpable or otherwise.

Inordinate Delay and Prejudice

20. Consequent upon the earlier ruling on the Defendants' inability to rely on post-writ and pre-limitation delay, it was not necessary for me to decide if such delay was inordinate and/or inexcusable, or whether any prejudice was suffered by any of the two Defendants, or whether there could be a fair trial of the action. However, it would not be right to allow the extensive efforts of counsel in putting forth their submissions on these issues passed without a determination.

21. The first period of delay was allegedly for 15 months between October 1990 and December 1991. However, within this period both Defendants had changed legal representation and had filed notice of change of solicitors in April and May 1991. In August 1991, the Plaintiff amended the writ. In the premises, real delay occurred only between August and November 1991, for a period of three months. In any event, the Plaintiff made a successful attempt to realise a warehouse held by it as security for the debtor's indebtedness during the full period of alleged delay. In the light of such excuse, any delay occurring during this period would be excusable in that it would be reasonable for the Plaintiff to try all efforts to reduce the liability of the Defendants before proceeding further against them on the guarantees. The delay was for a purpose of benefit not only to the Plaintiff, but to the Defendants as well.

22. The second period of delay was alleged to be for 10 months between January and October 1992. However, during this period further and better particulars were successfully sought from the 2nd Defendant during May/June 1992. Thus delay only occurred for about four months each before and after the obtaining of the said further and better particulars, totalling eight months in all. It should be noted that all parties were guilty of delay in filing lists of documents between November 1992 and July 1993. The 1st Defendant in particular was dilatory in complying with the order for discovery, and had to be compelled by an order made at the request of the Plaintiff.

23. The third period of delay was allegedly for 12 months between October 1993 and October 1994. This period had not been properly excused by the Plaintiff.

24. The final period of delay allegedly lasted for 19 months between December 1994 and July 1996. However, when the correspondence between the 2nd Defendant, who was apparently taking the lead for the defence side, and the Plaintiff was examined, the true reason for the long delay became clear. By letter dated 7 February 1995 to all Defendants, the Plaintiff clearly indicated its desire to set down the case for trial. In the same letter, in an attempt to narrow down the dispute, the Plaintiff sought confirmation of admission of the amount of indebtedness in view of the lack of clarity over the issue in the pleadings. In response, the 2nd Defendant complained about the Plaintiff's failure to join the debtor, Engstrong, and indicated the desire to commence third party proceedings against Engstrong as well as a claim for contribution against Yue Xiu. For that purpose, the 2nd Defendant sought specific discovery of documents from the Plaintiff. However, notwithstanding such threat no further action was taken by the 2nd Defendant whether for specific discovery or claims for contribution against any of the said parties. To avoid complications and delay from a claim for contribution, the Plaintiff successfully secured from Yue Xiu an agreed contribution to the extent of $30 million (i.e. 15.31 % of the Plaintiff's claim against the Defendants) in addition to its contribution of $12 million made before commencement of these proceedings. By letter of 18 September 1995, the Plaintiff informed the 2nd Defendant of the favourable news and its purpose in "expediting the progress" of these proceedings. As there was no response from any defendant to its request for confirmation of the amount of indebtedness, the Plaintiff sent off a chaser at the same time on 18 September 1995. There being no response again to the chaser, the Plaintiff sent off another chaser on 4 October 1995, indicating that steps would be taken to set down the action for trial if no response was received by 11 October 1995. The 2nd Defendant responded by letter dated 11 October 1995, stating that : "We are glad that your client is prepared to accept a notional contribution of 15.31% to be made by Yue Xiu Finance Co. Ltd". By the said letter, the 2nd Defendant repeated its threat for a claim for contribution and stated that "Our client can, and will, claim against Engstrong Limited for indemnity........ Would you please let us know whether you will add Engstrong Limited as an additional Defendant or leave it to our client to commence third party proceedings against Engstrong Limited for indemnity" (emphasis added). In the light of such exchange of correspondence, it surprised me that any of the Defendants should be complaining of any alleged delay on the part of the Plaintiff. The Plaintiff was anxious to set down the case for trial and none of the Defendants were co-operative towards this end. The 2nd Defendant was obstructing setting down of the action by continuing empty threats of a third party proceeding which never materialised. Time was spent by the Plaintiff to secure contribution from Yue Xiu in reduction of the Defendants' liability. The Defendants ungratefully accused the Plaintiff of acting without the consent or authority from them in this regard. I was wholly satisfied that no complaint could be lodged against the Plaintiff for any delay during this period. Furthermore, the 2nd Defendant had clearly indicated consent to the Plaintiff's success in securing the contribution from Yue Xiu when he expressed his pleasure towards the same in his solicitors' letter of 11 October 1995, and must be estopped from relying on any delay caused by the exercise.

25. Taking an overall view of the various periods of alleged delay against a consideration of the conduct of not only the Plaintiff but of the Defendants as well, I was not satisfied that there had been inordinate and inexcusable delay of an extent warranting such draconian sanction as a dismissal of the Plaintiff's claim. The operative delay was insufficient to justify granting the Defendants' application.

26. I was also not satisfied that the 1st Defendant could suffer any operative prejudice as a result of the delay. It was alleged on behalf of the 1st Defendant that he suffered a stroke in 1995 and was incapable of giving any credible evidence consequential upon the development of senile dementia. However, such prejudice must have a causal link with the risk of a fair trial not being possible. The only positive defence raised by the 1st Defendant was undue influence, and perhaps also misrepresentation, from his son, the 2nd Defendant. In Barclays Bank plc v. Orien [1994] 1 A.C. 180, the House of Lords settled the law regarding undue influence by holding, inter alia, that in a case of surety transaction where there was no relationship between the debtor and the surety giving rise to presumed undue influence, e.g. a case of debtor son and elderly surety parent, the transaction can only be set aside by the surety if the debtor was acting as the agent of the creditor in procuring the same; or if the creditor had actual or constructive knowledge of such undue influence. The 2nd Defendant had pleaded neither that the wrongdoer, the 2nd Defendant, was acting as agent of the Plaintiff; nor that the creditor had any knowledge of the alleged undue influence or misrepresentation. In the premises, the 2nd Defendant had failed to plead an essential element constituting the defence. Such omission was fatal to his ability to maintain the defence. The defence as pleaded was bad in law and could have been struck out. In any event, without pleading the necessary ingredients of the defence, no evidence could be adduced to substantiate them. In the premises, the inability of the 1st Defendant to give credible evidence would not have caused a risk of inability to have a fair trial. There would be no arguable defence requiring the giving of evidence by the 1st Defendant at the trial. The alleged prejudice was thus fanciful and would not have rendered a fair trial impossible.

27. The 2nd Defendant alleged fading memory as one of the prejudice he suffered. I did not accept the claim to be credible. The only positive defence raised by the 2nd Defendant's defence involved pure issues of law or issues of mixed law and fact that would not require the giving of any evidence by the 2nd Defendant. Issues were taken that the guarantee was ultra vires Engstrong's objects, that the Plaintiff had knowledge of the illegality of the guarantee as the transaction was a "Loan" within the meaning of the Money-lenders Ordinance, Cap.163, and Engstrong was consequently a money-lender. The 2nd Defendant then alleged his fading memory would prejudice him in a claim for contribution against the 1st Defendant. I found such complaint surprising as the disability of the 1st Defendant caused by the delay would make it easier for the 1st Defendant to claim against his father, if he ever intended to do so. The 1st Defendant would be unable to give credible evidence to substantiate any undue influence as a possible defence. Surely, the 2nd Defendant could not claim not to be able to recall his denial of any alleged undue influence or misrepresentation. If he did not commit any of the acts alleged, there would be nothing for him to forget. Mr Leong's disingenuous vague reference to Order 80 as preventing recovery of contribution from the 1st Defendant was rejected. It was not explained at all in what manner would Order 80 prevent such recovery. I was unable to see any such predicament from the provisions of that Order. In any event, I was given to understand that the 1st Defendant was not a man of means. The alleged damage to reputation had no relevance to any risk of inability of a fair trial, nor any causal link with the delay. Such damage would be caused by the fact of the proceedings and not the length of time the proceedings took to be completed. The alleged prejudice regarding increased interest was wholly unmaintainable as the 2nd Defendant had the use of money in the meantime.

28. In the premises, I was also not satisfied any of the two Defendants had suffered any prejudice that could have a causal link with the alleged delay.

29. For all the reasons given supra, the applications of both Defendants were dismissed with costs with certificate for two counsel.