DCCJ 765/2005
IN THE DISTRICT COURT OF THE
HONG KONG SPECIAL ADMINISTRATIVE REGION
CIVIL ACTION NO. 765 OF 2005
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BETWEEN
CMA CGM & ANL (HONG KONG) SHIPPING
AGENCIES LTD.
Plaintiff
And
SMART WIN SHIPPING (HK) LTD
Defendant
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Coram : Deputy District Judge K. Lo in Chambers (open to public)
Date of hearing : 19 May 2011
Date of handing down Decision : 5 August 2011
DECISION
The Application
1. The Defendant by their Summons dated 11February 2011 and 6 May 2011 applies to dismiss the Plaintiff’s action for want of prosecution and/or abuse of process.
Background
2. On 21 February 2005, Plaintiff commenced the present action against the Defendant for payment of detention charges, return of containers or alternatively, damages to be assessed as a result of the failure on the part of the Defendant to return 5 containers (“the Containers”).
3. Plaintiff amended his statement of claim on 8 March 2005.
4. Defendant issued Third Party Notice claiming indemnity from Third Party on 31 March 2005.
5. Defence was filed by the Defendant after Plaintiff conceded to several extensions of time applications on 11 May 2005.
6. Plaintiff later served its answer on the Defendant to Defendant’s request for Further and Better Particulars on their Amended Statement of Claim on 5 July 2005 and they also filed and served their Reply on 6 July 2005.
7. Meanwhile, on 30 September 2007, Plaintiff’s solicitors Messrs. Keith Ho & Co. ceased practice after serving notice of ceasing practice on 15 August 2007 on the Plaintiff.
8. Plaintiff did not instruct new firm of solicitors.
9. On 13 January 2011, Defendant’s solicitors wrote to Messrs. Choi & Liu, solicitors asking if they have instructions to act for the Plaintiff or else they would contact the Plaintiff direct. Messrs. Choi & Liu solicitors did not reply.
10. On 21 January 2011, Defendant’s solicitors wrote to the Plaintiff seeking their agreement to discontinue the Action. There was no reply.
11. On 11 February 2011, Defendant took out one of the present Summonses to dismiss the Plaintiff’s claim for want of prosecution.
12. On 16 February 2011, Plaintiff appointed Messrs. Choi & Liu as their solicitors in this Action.
13. On 6 May 2011, Defendant took out the other Summons seeking to dismiss the Plaintiff’s action for abuse of process.
The Relevant Legal Principles
Want of Prosecution
14. Parties accept that the approach in the House of Lords case of Birkett v. James New China Hong Kong Group Ltd (in liquidation) and Another v. AIG Asia Infrastructure Fund LP and Others
(a) There has been intentional and contumelious default, e.g. disobedience to a peremptory order of the court or conduct amounting to an abuse of process; or
(b) There has been inordinate and inexcusable delay on the part of the Plaintiff or his lawyers and such delay will give rise to a substantial risk that it is not possible to have a fair trial or is such as is likely to cause or to have caused serious prejudice to the Defendant.
15. Subsequent to the implementation of Civil Justice Reform however, it was laid down in the case of Winpo Development Limited v. Wong Kar Fu and Others
16. Where the delay of which complaint was made occurred before as well as after the introduction of Civil Justice Reform, the context in which the delay occurred must be looked at. A party could not be blamed for not observing a rule that did not exist at the relevant time. But where the period of delay or part of that delay had occurred since the introduction of Civil Justice Reform, the court would have to take into consideration any non-observance of the new rules.
Inordinate and inexcusable delay?
17. In the present case, Plaintiff has fairly and rightly conceded that there has been inordinate delay in their conduct of the case.
18. They said however the delay is not inexcusable and that there is no substantial risk that it is not possible to have a fair trial or that there is serious prejudice to the Defendant.
19. In this case, since the filing and serving of the Reply on 6 July 2005, the whole case has been “warehoused”.
20. The Plaintiff has done nothing towards conclusion of the case. In fact, even when they were notified in advance by their former solicitors, Messrs. Keith Ho & Co., that they would soon cease practice, they did nothing to instruct a new firm of solicitors in the Action. The whole case has gone to sleep.
21. Further, when the Defendant’s solicitors wrote to them on 21 January 2011, they still chose not to reply. It is only after the Defendant took out the Summons on the 11 February 2011 that the Plaintiff on 16 February 2011 instructed a new firm of solicitors. There has been a delay of 5 ½ years.
22. It is agreed between the parties that whether or not there is inexcusable delay, one should examine primarily from the Defendant’s point of view or at least, objectively, to decide if there is inexcusable delay (Hong Kong Civil Procedure 2011 25/L/7 at 586).
23. It is also submitted by Mr. K. Liu, counsel for the Plaintiff that the lapse of time may be very prejudicial if the circumstances of an accident or oral contracts or representations are in issue, but is of much less importance in a heavy, well-documented commercial action (Hong Kong Civil Procedure 2011, 25/L/7 at 586).
24. He referred to the Affidavit of Lai Sik Wing where Plaintiff explained and said they waited for the outcome of the recovery of containers by Defendant from Third Party.
25. Mr. Liu said that Plaintiff provided documents for Defendant to pursue the Third Party and instructed its solicitors not to proceed pending Defendant’s action against the Third Party.
26. He said also that the Plaintiff relied on the letter dated 28 September 2004 from Defendant’s solicitors and took the view that the parties would want to avoid costly litigation in view of the modest amount claimed.
27. It is submitted by the Plaintiff that they also took time to consider the issue of the proper law and forum, i.e. whether Plaintiff should take proceedings in French Court. Mr. Liu said this is understandable since Defendant had also pleaded that the proper law was French law and had reserved its right to amend the pleadings after seeking legal advice from French lawyers.
28. In the Affidavit of Mr Lai, Plaintiff also explained that they changed their executive manager (including the one who was handling these proceedings) in year 2005 and year 2008 and also moved its office in December 2008.
29. Mr. A. Wong, counsel for the Defendant said Plaintiff’s explanations for the delay is not valid or genuine.
30. He said there is simply no evidence showing that Plaintiff has pressed Defendant to proceed with its claim against the Third Party or otherwise monitored the progress of such third party proceedings. Hence, there is no truth in the assertion that Plaintiff chose to withhold its claim pending the determination of the third party proceedings.
31. He contended further that there is also no evidence showing that Plaintiff actually brought or did contemplate bringing proceedings in the French courts. He said, after starting the Action in Hong Kong, it is difficult to see why Plaintiff would wish to bring a separate action in France when Defendant was a company incorporated and operated in Hong Kong. He invited this Court not to accept that Plaintiff had put this action on hold by reason of its contemplating the issue of another set of legal action in the French courts.
32. He submitted that the delay is inexcusable both from the Defendant’s point of view and also viewed objectively.
33. This Court has no hesitation to accept the submission by Mr. Wong, that the delay was inexcusable, in particular having regard to the length of delay, reaction or rather inaction of the Plaintiff on receipt of the notice of cessation of practice from Messrs. Keith Ho & Co., the lack of response on receipt of the letter from the Defendant’s solicitors dated 21 January 2011 and the explanations given.
34. Even if the Plaintiff had, as they said the intention to wait for the result of 3rd party proceedings and/or consider the commencement of legal action in French Courts, it is totally unreasonable for them to be idle for 5 ½ years.
35. I rule therefore that the delay is both inordinate and inexcusable.
Substantial risk that fair trial impossible/serious prejudice to the Defendant?
36. In order to examine the above issue, it is necessary to consider the pleadings in order to identify the issues to be resolved.
37. Mr. Liu, summarized Plaintiff’s case as follows:-
(a) Plaintiff was entitled to the immediate possession of 5 containers (“the Containers”) that were loaned to the Defendant;
(b) Plaintiff’s claim is based on 2 bills of lading (“the Bills of Lading”) and an indemnity agreement as evidenced by 2 Indemnity Letters, an Arrival Notice, and a Notice for Hong Kong Import Charges;
(c) Defendant has converted the Containers for its own use.
38. The Defendant took out third party proceedings before putting in a Defence. In summary, Defendant’s pleaded case is as follows:-
(a) Plaintiff is not a party to the Bills of Lading and are therefore not entitled to rely on Bills of Lading;
(b) Defendant denies that an Arrival Notice or Notice for Hong Kong Import Charges were issued by the Plaintiff to the Defendant;
(c) Plaintiff is not a party to the Indemnity Letters or that the Indemnity Letters are unenforceable against the Defendant;
(d) Defendant denies that it has converted the Containers for its own use;
(e) Plaintiff’s claim is based on a penalty clause and therefore unenforceable.
39. Mr. Liu said in the present case, there is not much factual dispute but rather legal argument over whether the Plaintiff could sue on these Indemnity Letters.
40. He said according to the Defendant, there is only one area of factual dispute, i.e. whether Plaintiff had in fact issued Defendant an Arrival Notice or Notice for Hong Kong Import charges. He said previously at request of the Defendant, Plaintiff had replied to the letter Request for Further and Better Particulars by the Defendant to identify the relevant persons handling these documents and Plaintiff has already replied that they were unable to recall the particular persons.
41. It is submitted by Mr. Liu that any delay in proceedings would not cause any prejudice to Defendant in light of the nature of the factual dispute.
42. Mr. Wong on the other hand argued that as one of the issues involved in this action is whether or not Plaintiff could rely on the indemnity letters signed by Defendant (though they were not addressed to the Plaintiff) as Plaintiff contended, in the Further and Better Particulars that the they were given the same “not only in the capacity as the regional agent of CMA but also as a principal of its own in exchange for 5 release orders issued by the Plaintiff”.
43. The Defendant said therefore that they need to find out which staff of the Defendant signed the documents and which staff of the Defendant tendered them to the Plaintiff and to whom, even though the Plaintiff had previously replied that they could not identify the staff responsible.
44. Defendant said after the long lapse of time coupled with the fact that Plaintiff has not yet served their witnesses statements, it is difficult for the Defendant to know exactly the case they are going to meet and to identify and locate their witnesses to give oral evidence of the circumstances under which these documents came into existence and were handled.
45. He said even if the possible witnesses are identified, their memory of the events occurring in year 2004 may not be reliable due to the lapse of time;
46. Further, it is submitted by Mr. Wong that depending on the circumstances of each case, the Court is entitled and should be prepared to draw the inference that by reason of the delay, serious prejudice would be caused to the Defendant as a result of impairment of witnesses’ recollection.
47. He relied on the case of Nanjing Iron & Steel Group International Trade Co Ltd and others v. STX Pan Ocean Co Ltd and others Yeung Kit Ling v. Ma Kwan Ho Lawrence per acting CDJ Poon) at P. 11-14, which was affirmed on appeal in CACV 285/2010, 1 April 2011 (per Stock VP) at P. 26-28.
48. Mr. Wong further argued that Plaintiff relied on certain documents in order to establish their right to immediate possession of the Containers but has so far not disclosed the same nor did they file their list of documents in this Action.
49. Moreover, Mr. Wong criticized that as it is submitted by the Plaintiff that due to office relocation, they had lost the original documents and could only serve copies of the same on the Defendant, after they reentered the same from their previous firm of solicitors, in the circumstances, the Defendant was denied opportunity to inspect original documents.
50. Mr. Wong commented also that as there was change in persons handling the file for the Plaintiff, the Plaintiff would not actually know whether the documents kept by their former solicitors were in fact full set of documents as the Plaintiff might not previously have given all documents in connection with this action to their solicitors.
51. Defendant said therefore serious prejudice has been caused to the Defendant as they are deprived of proper and full discovery of relevant documents.
52. I note also that there is the issue of whether the Defendant did convert the Containers.
53. Although I agree that in the present case, the disputed issues substantially rest on construction of the documents and legal argument, there is still, as submitted by the Defendant, the factual dispute of whether the Plaintiff did convert the Containers, issue the Arrival Notice or Notice for Hong Kong Import charges as alleged and the circumstances under which the Indemnity Letters came into existence and/or were handled are also relevant and important.
54. I agree with the Defendant and they have discharged their burden of proof, that the delay is likely to cause or have caused serious prejudice to the Defendant.
55. Furthermore, it is clear that the Plaintiff here had failed his duty to further the underlying objectives of Civil Justice Reform and therefore adopting the approach in the Winpo
56. For completeness, I now deal with the Summons dated 6 May 2011 seeking to strike out Plaintiff’s claim on the ground that it is an abuse of process of the Court.
Abuse of Process
57. Parties both refer this Court to the case Grovit v. Doctor [1997] 1 WLR 640 HL where at P. 647G – 648A, Lord Woolf said:-
“The courts exist to enable parties to have their disputes resolved. To commence and to continue litigation which you have no intention to bring to conclusion can amount to an abuse of process. Where this is the situation the party against whom the proceedings is brought is entitled to apply to have the action struck out and if justice so requires (which will frequently be the case) the courts will dismiss the action. The evidence which was relied upon to establish the abuse of process may be the plaintiff's inactivity. The same evidence will then no doubt be capable of supporting an application to dismiss for want of prosecution. However, if there is an abuse of process, it is not strictly necessary to establish want of prosecution under either of the limbs identified by Lord Diplock in Birkett v James [1978] A. C. 297.”
58. Both parties agree that inordinate and inexcusable delay alone, however great, does not amount to an abuse of process.
59. This is the position taken by Lord Woolf in the case of Arbuthnot Latham Bank Ltd v. Trafalgar Holdings Choraria Sethia Birkett v. James Grovit v. Doctor
“The law ... may therefore be stated thus. Although inordinate and inexcusable delay alone, however great, does not amount to an abuse of process, delay which involves complete, total or wholesale disregard , put it how you will, of the rules of court with full awareness of the consequences is capable of amounting to such an abuse, so that, if it is fair to do so, the action will be struck out or dismissed on that ground...” (Emphasis added)
60. In the New China Hong Kong Group Ltd (in liquidation) and Another v. AIG Asia Infrastructure Fund LP and Others
61. In the same case, Stone J said:-
“66. As the circumstances of this case neatly illustrate, unless the 'Grovit v.Doctor' line of argument is confined to those instances which are patently abusive of the process, and may be demonstrated to be so, there is a danger that the time-honoured and established Birkett v. James doctrine - in terms of inordinate and inexcusable delay coupled with consequent prejudice - in effect will be emasculated by the back door, with the result that undue and inordinate delay, leading to inference of intention to prosecute the action no further, and hence characterization as an abuse of process, will be sufficient to get home on a strike out in the absence of the required element of prejudice.
…
69. In my judgment the appropriate approach to strike out applications of this nature is that adumbrated by Auld LJ in Miles v. McGregor (unrep) CA, 23 January 1998, wherein the learned judge stated:
“The emphatic articulation and the application by the court in Choraria [Choraria v. Sethia , [1998] CLC 625, CA] of this quite separate power to strike out proceedings for wholesale disregard of procedural rules because it constitutes an abuse of process of this court should not, however, be taken as a ready alternative to the court's power to strike out an action for inordinate and inexcusable delay. The abuse of process route is for cases of an exceptional nature where the conduct of the party in default amounts to an affront to the court and to its rules.” (emphasis added)”
62. In this case, as said, there is inordinate and inexcusable delay of 5 ½ years.
63. The delay starts from 6 July 2005 and ended on 16 February 2011. It therefore covers both pre and post Civil Justice Reform period.
64. O. 1A, r. 1 and O. 1A, r. 2 of RHC reads:-
“1. The underlying objectives of these rules are-
(a) to increase the cost-effectiveness of any practice and procedure to be followed in relation to proceedings before the Court;
(b) to ensure that a case is dealt with as expeditiously as is reasonably practicable;
(c) to promote a sense of reasonable proportion and procedural economy in the conduct of proceedings;
(d) to ensure fairness between the parties;
(e) to facilitate the settlement of disputes; and
(f) to ensure that the resources of the Court are distributed fairly.
2. (1) The Court shall seek to give effect to the underlying objectives of these rules when it –
(a) exercises any of its powers (whether under its inherent jurisdiction or given to it by these rules or otherwise); or
(b) interprets any of these rules or a practice direction.
(2) In giving effect to the underlying objectives of these rules, the Court shall always recognize that the primary aim in exercising the powers of the Court is to secure the just resolution of disputes in accordance with the substantive rights of the parties.
65. It is not disputed, as submitted by Mr. Liu that in Re Wing Fai Construction Co Ltd Nanjing Iron & Steel Group International Trade Co Ltd & Ors v STX Pan Ocean Co Ltd & Anor
“11. It is quite clear that O 1A, r 1(b) is not a Rule that requires a specific act to be done as such, it is one of the “underlying objectives” of the Rules namely to ensure that a case is dealt with as expeditiously as is reasonably practicable. It should be otiose to point out that there is a marked difference between a Rule which requires a particular act to be done and a Rule which sets out an underlying objective or guiding principle. There is no specific Rule relating to striking out for want of prosecution in the current High Court Rules. The matter is still one of the exercise of the inherent jurisdiction of the court. Following the introduction of the Civil Justice Reform, there are, of course, specific provisions in the Rules in relation to various steps which are required to be taken in relation to an action and orders which should be made when those steps have to be taken. Those provisions are designed to ensure that delay will not occur in the preparation of the case for trial.”
66. Clearly, the Plaintiff in this case had failed to comply with the rules governing the timetable for steps to be taken for the case to trial without delay.
67. It is said by the Defendant that having regard to the underlying objectives of CIVIL JUSTICE REFORM, the continuance of this action is clearly an abuse of process of the Court.
68. Defendant says that there is no doubt that the Plaintiff has no intention to prosecute this action until trial for the following reasons:-
(a) Out of the 5 ½ years delay, nearly 2 years occurred after the implementation of the CIVIL JUSTICE REFORM.
(b) As said earlier, the delay is inordinate and inexcusable
(c) That the Plaintiff even after being notified by its solicitors on record that they would cease practice in September 2007 chose not to appoint another firm of solicitors to act on its behalf in this action. This strongly supports the inference that Plaintiff had no intention to proceed with this action.
(d) That the Plaintiff when asked by the Defendant’s solicitors not to proceed with the action again chose not to respond and also continued its inaction. No steps was taken to proceed further with the action, despite such enquires from the Defendant.
(e) The conduct on the part of Plaintiff in not keeping the documents in relation to the present case in safe custody again supports the Plaintiff’s lack of intention to bring the case to trial.
69. Defendant submitted that above conduct clearly is in blatant breach of the rules of Court and the underlying objectives of CIVIL JUSTICE REFORM. I agree. The conduct of the Plaintiff, is, in my view, a total disregard of the rules .
70. Having regard to the above, even recognizing the primary aim in exercising the powers of the Court is to secure the just resolution of disputes in accordance with the substantive rights of the parties, I find it appropriate to exercise my discretion to dismiss this action also on the ground of abuse of process of the Court under the Grovit v. Doctor
Conclusion
71. It is ordered that Plaintiff’s claim in this action be dismissed and there be an order nisi that Plaintiff should pay the costs of this action including costs of this application with certificate for counsel, the same is summarily assessed at $96,810.
( K. Lo )
Mr. Kelvin K. H. Liu, instructed by Messrs. Choi & Liu, for the Plaintiff
Mr Anson Wong, instructed by Messrs. DLA Piper Hong Kong, for the Defendant