CHAN NGA LAI MARY v. MATCH POWER INVESTMENT LTD

DCCJ 5416-8/2009 &
DCCJ5463-6/2009
(Heard Together)

IN THE DISTRICT COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

CIVIL ACTION NO. 5416 OF 2009

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BETWEEN

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DECISION

Introduction

1.  Before me are the Defendant’s applications for dismissal in each of these 7 actions for want of prosecution and, in particular, that the dilatory prosecution of each of these actions amounts to an abuse of process.

Background

2.  All 7 actions concern essentially the same facts.  Each arose out of complaints made by purchasers of units in One Beacon Hill (the “Development”), of which the Defendant was the developer.

3.  The complaint in each case was that the units were allegedly delivered late. 

4.  Under Clause 4(1)(c) of the Sale and Purchase Agreement (the “Agreement”), the Development was to be completed by 31 December 2003, subject to extensions of time granted by the Authorized Person.  Such an extension was granted, up to 29 February 2004.  The Certificate of Compliance was issued on 29 July 2004.

5.  Clause 4(4)(b) of the Agreement provided that, if the purchaser did not rescind the Agreement within 21 days from 31 December 2003 or the “extended date” (i.e. 29 February 2004), the vendor will pay the purchaser interest at the rate of 2% p.a. above HSBC’s prime rate, from the date following the contractual completion date as extended by the Authorized Person up to the actual date of completion.

6.  The Plaintiffs have contended the Defendant was in breach of Clause 4(1)(c) and is therefore liable for contractual interest under Clause 4(4)(b). 

7.  In 2 cases (DCCJ 5464 and 5466/2009), consequential damages are also claimed. 

8.  Although the Certificate of Compliance serves as conclusive evidence of completion, or deemed completion, of the Development, Clause 4(7) of the Agreement does not preclude the Defendant from proving that it had complied with Clause 4(1)(c) by other means.

9.  All the facts alleged in support of the claims would or should have been known to the Plaintiffs in 2004.

10.  The generally indorsed Writ of Summons in each of the 7 actions was issued on 28 December 2009 (in DCCJ 5416, 5417 and 5418/2009) and on 31 December 2009 (in DCCJ 5463, 5464, 5465 and 5466/2009). 

11.  The Writs were issued as a protective measure because of advice received by the Plaintiffs that the limitation period in respect of each claim might expire on 31 December 2009 or, alternatively, on 1 March 2010. 

12.  The Plaintiffs had decided to wait for judgment in a trial of preliminary issues in another set of proceedings (involving a similar claim) initiated by other purchasers of the Development before deciding whether they would proceed with their claims herein.  That other claim was HCA 1829/2005. Judgment on preliminary issues in that case was given by Chu J, in favour of those purchasers, on 24 December 2009.

13.  Further, since the limitation period could alternatively have expired on 1 March 2010, and since other purchasers of the Development had approached the Plaintiffs’ solicitors, it was thought to be more logistically efficient to serve the Writs herein together with all other writs, if any, on the Defendant after 1 March 2010.

14.  The draft Statement of Claim in each case was settled by counsel in June 2010.

15.  In each case, demand letters were sent by the solicitors for the Plaintiffs to the solicitors for the Defendant on 19 August 2010.

16.  The Writ and Statement of Claim were served on 2 September 2010. 

These applications

17.  The Defendant’s application in these cases is explicitly not based on traditional Birkett v James principles.

18.  The principal basis of the application is Reyes J’s remarks in Nanjing Iron & Steel Group International Trade Co. Ltd v STX Pan Ocean Co. Ltd (HCAJ 177/2006, 7 September 2009) at para. 13 as follows:

“In the absence of some compelling reason, it is contrary to the underlying objective in Order 1A, Rule 1(b) to ensure that a case is dealt with as expeditiously as is reasonably practicable (‘to ensure that a case is dealt with as expeditiously as is reasonably practicable’) for a party to allow an action to languish for 2 years once the same has been commenced. I am unable to see any compelling reason in this case. There simply is no excuse for such a long delay.”

19.  Support for these remarks is said to be derived from the following extract from Lord Woolf’s speech in Arbuthnot Latham Bank Ltd v Trafalgar Ltd [1998] 2 All ER 181, 188 set out at para. 54 of Master Marlene Ng’s judgment in Kwok Luen (Macau) Agente de Programs Televisivos Limitada & ors v Tidetime Sun (Group) Ltd & anr (HCA 1456/2006, 29 July 2010):

“While an abuse of process can be within the 1^st category identified in Birkett v James it is also a separate ground for striking out or staying an action …… which does not depend on the need to show prejudice to the defendant or that a fair trial is no longer possible. The more ready recognition that wholesale failure, as such, to comply with the rules justifies an action being struck out, as long as it is just to do so, will avoid much time and expense being incurred in investigating questions of prejudice, and allow the striking out of actions whether or not the limitation period has expired ……”

20.  The proposition to be drawn from these passages read together is that, post-Civil Justice Reform, where there has been inordinate and inexcusable delay, the action may be struck out as an abuse of process, at the discretion of the Court, without needing to show prejudice.

21.  The Writs in these cases being post-CJR writs, and the entire period in question occurring after 2 April 2009, it is said that Nanjing represents the current law and is applicable on these facts – and, that being so, I should exercise my discretion in favour of striking out the Writs herein.

22.  The period in question here is the 8 months from 1 January 2010 (the earliest date on which the limitation period could be said to expire) to 2 September 2010 (the date of service of the Writ and Statement of Claim in each case). 

23.  The initial part of this period is the 2 months from 1 January 2010 to 1 March 2010.  Miss Lisa Wong SC (leading Mr Bernard Man) for the Defendant submitted, in the first place, that this was a “late start” case and, further, that generally endorsed Writs could and should have been served almost immediately after they were issued – and that the Plaintiffs should have sought an arrangement with the Defendant to adjourn further steps in these actions until it was known whether other writs would also be taken out.

24.  Awaiting the result of the striking out application in HCA 1829/2005 was, in my view, a reasonable explanation for the alleged “late start” in these cases.  I accept that the striking out application was brought on facts peculiar to that case – but waiting to see whether there would be up to 7 additional groups of plaintiffs, bringing much the same claim as the claims herein, was a good reason to await issuing these Writs until 31 December 2009.  I would not regard this as a classic “late start” case.

25.  For the same reason, I also consider it reasonable for the Plaintiffs to have waited until 1 March 2010 to see if other claimants would emerge to join in this group of claims.  Miss Wong SC’s submission also assumes that a consensual arrangement with the Defendant could actually have been reached.  I see no basis on which I can readily make that assumption.  In any event, any such arrangement would have produced the same nett pause in overall progress, from 1 January 2010 until 1 March 2010.

26.  The next part of the period in question is the 5½ months from 2 March 2010 until 19 August 2010, when demand letters were sent.  During this period, counsel was apparently selected and instructed, and draft statements of claim prepared, and instructions sought and then received on those drafts.  The draft claims were ready in June 2010.  There was no step taken, vis-à-vis the Defendant, until the issue of demand letters on 19 August 2010. 

27.  One could not describe progress during these months as being hasty. Miss Wong SC also submitted that the Statements of Claim eventually served are succinct to the point of simplicity.  But clearly there was activity, and in my view the passage of time in question falls short of delay that could be described, even post-CJR, as inordinate delay.

28.  A fortnight elapsed between the issue of demand letters on 19 August 2010 and the service of Writs and Statements of Claim on 2 September 2010.  I do not believe that this time should be counted in judging whether there was delay – which, in any event, amounts to a small part of the period in question.

29.  In short, there was in my view sufficiently compelling reason to explain the 8 months that passed from issue to service of proceedings.  Further, that period does not, in my view, amount to delay of inordinate length in the circumstances of this case.

30.  The facts underlying these applications are starkly different to those considered in Nanjing (supra), even allowing for the fact that the delay in that case occurred pre-CJR.  In that case, the limitation period had been extended by agreement for 2 years and the writ was issued towards the end of that extended period, in August 2006.  Then nothing at all happened until December 2008, when the plaintiff’s solicitors requested the defendant’s solicitors to consent to an extension of time for the filing of the statement of claim.  A draft claim was not actually filed until 23 June 2009.

31.  In Newbond Properties Ltd v Match Power Investments Ltd (DCCJ 127 & 128/2007, 14 June 2010), also relied on by the Defendant, the delay in question was 2 years, of which 6 months was post-CJR delay, for which there was no explanation at all. 

32.  Mr Tim Kwok, for the Plaintiffs, invited me to note that Reyes J’s decision in Nanjing was not endorsed as a good statement of post-CJR law by the Court of Appeal in Re Wing Fai Construction Ltd [2010] 3 HKC 593 and (he says) effectively stands alone in the case law on striking out.  He also urged me to read RHC Order 1A rule 1(b) as setting out guiding principles rather than hard and fast rules.   In view of the findings I have already arrived at, I do not consider it necessary to do more than briefly note  Mr  Kwok’s submissions for the record.

33.  The subsidiary basis of the Defendant’s case is that it is an abuse of process to commence proceedings but then to “warehouse” them until it is a convenient time for a party to pursue them: per paras 52 & 53 of Master Marlene Ng’s judgment in Kuok Luen (Macau) (supra).

34.  I do not accept that there has been “warehousing” in these cases.

35.  Any “warehousing” as such was for the period 1 January 2010 to 1 March 2010, when the Plaintiffs were waiting to see if there would be other parties joining in the claims against the Defendant.  In my view there was a reasonable explanation for this 2-month wait.  It is also not remotely long enough to amount to an abuse.  I do not accept that there was “warehousing” in the period from 1 March 2010 to 2 September 2010 – when, as set out above, there was activity on the part of the Plaintiffs.

36.  My findings as set out above would have been sufficient to dispose of these applications in favour of the Plaintiffs.  However, I also have had regard to 3 further minor matters in arriving at my decision.

37.  First – while remembering that prejudice need not (on the Defendant’s case) be shown – the only possible prejudice to the Defendant that has been suggested here, assuming delay, is that there would be a larger amount of interest payable on any judgment awarded against the Defendant at the end of trial.  Miss Wong SC expressly did not adopt the evidence in the Defendant’s affirmations regarding other forms of prejudice.  I do not regard the interest point as amounting to prejudice.  This would be a discretionary matter for the trial judge – and interest need not be awarded for periods of culpable delay by the Plaintiffs prior to judgment.

38.  Second, I bear in mind that service of the Writs and Statements of Claim in these cases was made within the allowable 12 months, and that no orders or deadlines were breached – or even made.

39.  Third, I take into account the fact that an appeal from Chu J’s in HCA1829/2005 had been launched, by the Defendant, during the period in question, thus adding to the period in which the Plaintiffs could be said to be waiting to see if there would be up to 7 additional sets of plaintiffs bringing claims similar to these claims.  (The appeal was heard by the Court of Appeal in CACV 5/2010 and dismissed on 2 November 2010).  While I accept that there is a limit to which one can properly await the result of an appeal, it seems to me reasonable to have some regard to the existence of that appeal in deciding whether there was inordinate or inexcusable delay in these cases.   

40.  Quite apart from my particular findings on length of delay, explanation for delay and “warehousing” in these cases, I would thus not in any event – as a matter of discretion, in all the circumstances – strike out the claims herein as an abuse of process. 

Conclusion

41.  I dismiss the applications.

42.  I make a costs order nisi that the costs of and incidental to these applications be to the Plaintiffs in any event.