W.P. HOLDINGS LTD v. SWISSAIR (SWISSOTEL) MANAGEMENT LTD

HCA 9736/1999

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

ACTION NO. 9736 OF 1999

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REASONS FOR JUDGMENT

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1.  This is a dispute on the standard of costs upon the abandonment of an appeal by the defendant against the Registrar, and also for direction on the exchange of witness statements upon lifting of the stay pending appeal.

2.  At the hearing, I ordered that the appeal be dismissed with indemnity costs (including the costs of the stay application) to the plaintiff, and I made an unless order for the exchange of witness statements by the defendant.  I now give my reasons.

Background

3.  On 14 June 1999, the plaintiff commenced the action against the defendant for breach of joint venture agreement.

4.  The initial round of pleadings closed at the end of 2000, and summons for directions was taken out in April 2001.  In June 2001 the plaintiff applied for substantial amendment to the Statement of Claim, and the exercise completed in June 2003 with the filing of the Re-Amended Reply.

5.  By an order dated 12 January 2004 before Master Wolley, each party do exchange witness statements within 120 days.  The witness statements were not exchanged.

6.  From October 2003 to October 2006, there was no formal steps taken in the proceedings by the plaintiff, and notices of intention to proceed were twice filed by the plaintiff on 1 September 2005 and 2 October 2006.

7.  During that period, the parties have been in correspondence relating to the exchange of witness statements.  The plaintiff’s solicitors had written to the defendant’s solicitors asking for timetable of exchange of witness statements, and the defendant’s solicitors were unable to say much time was needed until June 2005 when they said 6 more months were needed.

8.  Meanwhile, on 11 March 2005, the plaintiff wrote to the solicitors for the joint venture company that they were unable to complete preparation for trials (including witness statements) because they were unable to inspect the files of the joint venture company.

9.  At any rate, by a consent order dated 6 December 2006, each party shall exchange witness statements within 90 days.

10.  On 22 March 2007, the plaintiff took out a summons for an order that unless the defendant exchange witness statements by 5 p.m. on 10 April 2007, the defendant shall not be entitled to adduce witness evidence without leave of the court.

11.  On 26 March 2007, the defendant took out a summons to dismiss the action for want of prosecution on the ground that it has since the Consent Order lost contact with 2 of its witnesses, Mr Martinet and Mr Neiderer.

12.  On 30 March 2007, the Registrar dismissed the plaintiff’s summons, and ordered the defendant do exchange witness statements within 28 days.

13.  On 12 April 2007, the defendant filed a notice of appeal against the 2 decisions of the Registrar.  On 24 April 2007, the defendant obtained a stay of the order of exchange of witness statements pending the determination of the defendant’s appeal.

14.  On 27 August 2007, the defendant’s solicitors informed the plaintiff’s solicitors that it would not proceed with the appeal.  The defendant has been able to locate Mr Martinet and Mr Neiderer.  The defendant agreed to pay the plaintiff’s costs of the application up to 27 August 2007.  But the plaintiff asked for indemnity costs on the appeal (including the stay application).

15.  The plaintiff suggested that the exchange of witness statements should now take place within 14 days.  The defendant asked for 90 days instead.

Indemnity costs

16.  In Choy Yee Chun (The Representative of the estate of Chan Pui Yiu) v. Bond Star Development Ltd [1997] HKLRD 1327 (CA), Stock J (as he then was) said at p. 1334 E-F:

“

A case in which the successful party has demonstrated that the proceedings were initiated or prosecuted by the unsuccessful party in a manner which constitutes that party’s proceedings an abuse of the process of the court might well be a candidate for an award of taxation of costs on an indemnity basis. A taxation of the successful party’s costs on an indemnity basis could properly be ordered, in my opinion, where the proceedings were scandalous or vexatious, or had been initiated or prosecuted maliciously, or for an ulterior motive, or in an oppressive manner. Any proceedings instituted or prosecuted in such circumstances as to constitute an affront to the court could properly be the subject of a direction for the taxation of the successful party’s costs on the indemnity basis.”

17.  Mr Bunting SC, for the plaintiff, submitted that the defendant’s appeal is oppressive on the ground that:

(1)	The Consent Order precluded the defendant from applying for striking out for want of prosecution;
(2)	The application was devoided of merits in that:
	(a)	The defendant had acquiesced in or at least going along with any delay by continuously seeking further time;
	(b)	The defendant had failed to file any evidence on any serious prejudice to a fair trial.

18.  Mr Bunting no longer argued the ground on ulterior motive, save that he mentioned the defendant, by the side wind, got an extra 5 months during the stay pending appeal.

19.  Mr Bunting referred to Kerry Foodstuffs Co Ltd (formerly Gilchester Co Ltd) v. Phulsawat Navy Co Ltd & ors CACV 262/1998.  There, the plaintiff has been guilty of inordinate and inexcusable delay in prosecuting the action, but the defendants have for some 10 times consented to joint application for extension of time at the instance of the plaintiff.  Godfrey JA (as he then was) said at p. 7 of the judgment:

“

The delay in this case was inordinate and inexcusable and  accept that what the 1st defendant had done here hardly amounted to a ringing endorsement of the plaintiff’s right to bring the action; but what the 1st defendant did do, in going along with the plaintiff’s conduct of the action in this desultory way was sufficient, in my judgment, to entitle the judge to refuse to strike out the action.”

20.  Mr Bunting referred Birkett v. James [1978] AC 297 as approved in Kerry Foodstuffs in setting out the law that the discretionary power to dismiss an action for want of prosecution should be exercised only where the plaintiff’s default has been intentional and contumelios, or where there has been inordinate and inexcusable delay on his or his lawyer’s part giving rise to a substantial risk that a fair trial would not be possible or to serious prejudice of the defendant.

21.  Mr Bunting pointed out that in the affidavit evidence filed in support of the stay application, it was only said that Mr Martinet and Mr Neiderer could not be contacted without any further details.  In the later evidence filed upon the re-establishing of contact, no details was given either.  Hence, the vagueness of the evidence on prejudice meant that the appeal was doomed to fail.

22.  On the lack of detailed evidence on prejudice, Mr Jonathan Harris SC, for the defendant, pointed out that no evidence was filed before the Registrar because the summons was dismissed upon the 3 minutes call- over, without the opportunity of filing of any affidavit.  In the affidavit in support of the stay, there was a reservation that further evidence will be filed in support of the appeal.  Now that the appeal is abandoned, there is no occasion for filing any further evidence.

23.  I am not dealing with the appeal proper, and I shall only look at the situation as is.  In any case, for reasons which will become apparent, I need not delve into the prejudice point.

24.  As to “acquiescence”, Mr Harris referred to Roebuck v. Mungovin [1994] 2 AC 224 where it was held that conduct by a defendant that induced the plaintiff to incur further expenses in the pursuit of the action was not an absolute bar in law to his obtaining a striking out order on the ground of previous inordinate, inexcusable and prejudicial delay by the plaintiff; that it was a relevant factor to be taken into account by the judge in the exercise of his discretion to strike out the claim and was to be given such weight as was appropriate in the circumstances.

25.  Mr Harris submitted that there is no bar to the defendant’s application for striking out.  Although it might be said to be over-ambitious, it was certainly not oppressive so as to be indignant conduct from the view point of the court.

26.  Mr Harris also pointed out that during the 5 months pending appeal, the parties have been in negotiations.

27.  Indemnity costs are in the discretion of the court, and the circumstances of the individual case must be considered to see whether there is such justification.

28.  Looking at the history of the proceedings, the plaintiff has been slow but not inactive.  During the 3 year from 2004 to 2006 after Master Wolley first ordered the exchange of witness statements, both parties have encountered difficulties in getting their witness statements ready, and neither was too serious in pressing the other.  On the eve of the Consent Order, the plaintiff got its act together and tried to reinstate a timetable for the exchange of witness statements.  Mr Harris accepted that by agreeing to the Consent Order, the defendant must be taken to have every intention to comply with it without any foreseen difficulties.  Hence, the loss of contact with the witnesses after the Consent Order was a change in circumstances which could happen at any time, and had nothing to do with the inordinate delay, if any, in the prior period.  Mr Harris submitted that the longer a case drags on, the more prone it is to lose a witness.  But that is not so with witnesses whose contact has been maintained (as said, presumably up to the time of the Consent Order). 

29.  I consider that the appeal is utterly devoid of merit, and it is unnecessary satellite litigation with the effect of prolonging the main litigation.  Granted that the parties might have been in negotiations in the past few months, the appeal will no doubt be an unnecessary complication on the way.  Hence, I hold that the appeal is oppressive, and indemnity costs should be awarded upon its abandonment.

Time for exchange of witness statement

30.  Mr Bunting asked for the following order:

“	Unless the [defendant] exchange witness statement(s) with the Respondent by 5 pm on 27 September 2007, the [defendant] shall not be entitled to adduce witness evidence without the leave of the court.”

31.  Save as to the extended time of 90 days instead, Mr Harris said he was not unhappy with the form of the order, as he considered that it was not worded as an unless order.

32.  Mr Bunting made it clear that an unless order was sought, and I told Mr Harris that the draft order was worded as such.  Whether the defendant can obtain leave in the event of non-compliance is another matter.

33.  I was minded to make an unless order in view of the delay since early 2004 where the exchange of witness statements was first ordered.  Now that the defendant has been able to locate its witnesses, what remains is to give the defendant sufficient time so that it can only have itself to blame for any non-compliance.

34.  Considering the location of the witnesses, and the documents involved, I allowed the time of 90 days.  Since it is an unless order, the time should be stated as “by 5 p.m. on 12 December 2007” instead of “within 90 days hereof” as previous ordered.

35.  I thank Mr Bunting and Mr Harris for their helpful submissions.