XCHRX CHOW CHING MAN AND SEVEN OTHERS v. SUN WAH ORNAMENT MANUFACTORY LTD. AND EIGHTEEN OTHERS

1993, No. A9616

IN THE SUPREME COURT OF HONG KONG

HIGH COURT

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J U D G M E N T

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The Background

1. On 26 October 1990, part of a heavy canopy extending from a building in Kwa Wan Road, Kowloon over the pavement collapsed, killing several people and injuring others. On 22 October 1993, a few days short of the expiry of the limitation period, the plaintiffs issued the writ in this case. Under Order 6, rule 8, the writ was valid in the first instance for a period of twelve months from the date of issue. On 19 October 1994, the plaintiffs issued a summons asking for the period of validity of the writ to be extended for 12 months. On 22 October 1994, the Master, after reading an affidavit filed in support of the application, granted a renewal for 12 months. The defendants were then served within a matter of days, although the copies served on the twelfth, thirteenth and fourteenth defendants were returned through the postal service.

2. The first, second, third, fifth, sixth, seventh, eighth, tenth, eleventh, sixteenth, seventeenth, eighteenth and nineteenth defendants now apply for this renewal to be discharged, and for the service of the writ to be set aside. The fourth and ninth defendants have filed defences, and have not joined in this application. The twelfth, thirteenth and fourteenth defendants are in default, and judgment has been entered against them. The fifteenth defendant is in liquidation, and is not participating in these proceedings.

3. All the defendants before me are local.

The Law

4. The law relating the exercise of the discretion to extend the validity of a writ is contained in two House of Lords decisions; Kleinwort Benson Ltd v Barbrak Ltd [1987] AC 597 (referred to before me as The Myrto) and Waddon v Whitecroft Scovell Ltd [1988] 1 WLR 309.

5. The Myrto was case concerned with the liability of some 200 different cargo-owners for the cost of discharging cargo from a ship. The plaintiff was anxious about the legal costs that would be incurred in proceeding against so many people. Only small sums were recoverable from most of the cargo-owners, so anything more than minimal costs incurred in respect of these claims would make recovery uneconomic. Accordingly, the plaintiff decided to take proceedings against one of the cargo-owners for the purpose of establishing the amounts of the liability of the cargo-owners in principle. If this principle were established, the plaintiff would be able to present each cargo-owner with a calculation of the precise sum due. In this way, the plaintiff hoped to persuade the cargo-owners to pay without high legal costs being incurred. In order to prevent the claims against the other cargo-owners becoming time-barred, the plaintiff issued a writ against them. This writ "could easily have been served" on these cargo-owners, but the plaintiff decided not to do so to avoid setting all these other actions in motion. Instead, the plaintiff applied for and obtained an extension of 12 months. "The ground of this extension was plainly the saving of unnecessary legal costs for all the parties concerned."

6. The plaintiff succeeded in the "test" case, but there were delays in perfecting the order and calculating the sums due by the other cargo-owners, so the plaintiff obtained another extension; this time for 3 months. "Again it is plain that the ground for extension was the saving of unnecessary legal costs for all the parties concerned." The writ was served some 10 days before the expiry of its extended validity.

7. This plan of action by the plaintiff was largely successful. "This substantial success was achieved without incurring more costs in the present action than those of issuing the omnibus writ in the first place, applying for and obtaining the two extensions, and ultimately serving the writ on all the defendants."

8. In his speech, Lord Brandon reviewed the authorities. He concluded that "the power to extend shall only be exercised for good reason", and the rule "should be interpreted as requiring 'good reason' and no more." He said, at 622H - "Whether there is or is not good reason in any particular case must depend on the circumstances of that case, and must therefore be left to the judgment of the judge who deals either with an ex parte application by the plaintiff for the grant of an extension, or with an inter partes application by the defendant to set aside an extension previously granted ex parte." At 623C, he said - ". . . the judge is entitled to have regard to the balance of hardship. In doing so, he may well need to consider whether allowing an extension will cause prejudice to the defendant in all the circumstances of the case."

9. It was said that the judge at first instance had taken account of the fact that the case was a wholly exceptional one, that the plaintiff's plan saved legal costs that would have fallen on the defendants, that the cargo-owners had had their cargo delivered to them in good time and had undertaken to pay if they were found liable to do so, that the defendants knew of the possibility of a claim against them, and that none of the defendants were prejudiced by the delay in service of the writ. Lord Brandon held, at 624B - ". . . these matters taken together, constituted material on which Sheen J. could properly hold that there was good reason for allowing the two extensions . . . Put shortly the good reason was the saving of unnecessary proceedings and costs achieved without any prejudice to the respondents."

10. In Waddon, the facts of which do not matter, Lord Brandon repeated the principles stated in The Myrto. He did, however, expand on the aspect of the "balance of hardship". At 317H, he said - "This House was not saying that the balance of hardship could of itself constitute good reason for extending the validity of the writ. What it was saying was that, where there were matters which could, potentially at least, constitute good reason for extension, balance of hardship might be a relevant consideration in deciding whether an extension should be granted or refused." If there were no matters which could, even potentially, amount to good reason, "the question of balance of hardship did not arise."

11. In this case, Lord Brandon considered whether there was a difference between a good reason for an extension of the original period of the validity of the writ, on the one hand, and a good reason for failing to serve it during that period, on the other. Lord Brandon said - "While it may be possible to visualise a case in which the establishment of the second matter is not a necessary step to establishment of the first, I do not find it easy to do so. In the present case at any rate it seems to me that the two matters are inextricably bound together." I think that they are so inextricably bound in this case also. Indeed, all the reasons given in this case to justify an extension are said to be the reasons not serving the writ during the period of validity.

12. I was referred to several other decisions. I have read them all again, but they do not help me much in this case.

13. Mr Sarony urges that I should adopt a flexible approach to this matter; the sort of approach cited in Costellow v Somerset County Council [1993] All ER 952. That was a case of an application to dismiss for want of prosecution, and the Master of the Rolls said that the first instance judge had taken much too narrow a view of his task by reliance on an inappropriate analogy with the Order with which I am concerned. He recognised, therefore, that Order 6 required a different approach.

14. Mr Sarony said that I should look at the overall picture, and take account of the fact that there was other litigation arising out of the same disaster against all the defendants, save the nineteenth, that default judgment had been obtained against the twelfth, thirteenth and fourteenth defendants, and that the fourth and ninth defendants were not challenging the validity of the writ. These defendants, it was said, would undoubtedly, if I ruled in favour of the defendants, bring them back into the action again. It may be that, like the balance of hardship factor, these are matters that could legitimately be taken into account if there were, potentially at least, a good reason for the extension, but they cannot, in themselves, provide that good reason.

15. Mr Sarony says that, in effect, the defendants are complaining about an extension of only a few days, and I should regard this as de minimis. I cannot do that. I wish I could. The plaintiffs did not serve within the unextended period of the validity of the writ. The service is bad unless they had a good reason for obtaining the extension. If there was no good reason, I cannot ignore that the service was bad.

16. In spite of Mr Sarony's attractive arguments, which I would have accepted if I was able to do so, it is clear to me that before I can exercise my discretion in favour of the plaintiffs, there must be good reason for the grant of an extension of the period of the validity of the writ.

The Evidence

17. The affidavit on which the Master acted in granting the extension was that of Mr Timothy Hancock, a partner of the plaintiffs' solicitors. This was sworn on 18 October 1994. Mr Hancock says that a generally endorsed writ was issued on 22 October 1993, and explains that this was a few days before the expiry of the limitation period. He says that service of the writ was not effected immediately. This was a deliberate decision by him and counsel because the plaintiffs might not wish to proceed against all the defendants named in the writ. He pointed out that if they failed against a particular defendant, he would be entitled to costs, and, in extreme cases, this could wipe out any benefit obtained by judgment against other defendants.

18. Mr Hancock says that before a final decision could be taken in this respect "a very considerable amount of inquiries had to be made and expert advice taken." He says that the collapse of the canopy might stem from unauthorised amendments as long ago as 1978, and this has made the search for relevant documentation extremely difficult.

19. He goes on to say that - "Despite these difficulties, decisions have now been made as to which of the defendants are to be proceeded against and Counsel has now prepared a draft statement of claim. The draft is with leading counsel for settling and I anticipate it will be available either today or tomorrow. I will be in a position to file a settled statement of claim before the time limit for service expires. With some Defendants, my firm has been in contact with solicitors and they have already indicated they have instructions to accept service. For most of the Defendants, however, it would be necessary to effect service as soon as the Statement of Claim has been issued but such service will have to be personal unless the time for service is extended. It will not be possible to serve by either ordinary or registered post."

20. Mr Hancock then referred to an anticipated difficulty in locating "at least one of the defendants". He referred to the eighteenth defendant, but it is now conceded that he was mistaken in this; he should have referred to the twelfth, thirteenth and fourteenth defendants.

21. Finally, Mr Hancock spoke of the difficulties created by the fact that he was dealing with so many plaintiffs.

22. In a further affidavit sworn on 21 February 1995 for the purpose of the proceedings before me, Mr Hancock says that he had always appreciated that it would have been possible to serve the generally endorsed writ on the defendants followed later by the statement of claim and the statement of special damages, but "good personal injury case management did not permit" this approach in this case. He says that "the object of the new approach to Personal Injuries Practice and Procedure is for the plaintiff to serve together with his fully particularised Statement of Claim, a Statement of Special Damage and Medical Reports which are collectively such that the defendant may accurately assess his liability and quantum without more upon receipt of the Statement of Claim and Statement of Special Damage".

23. In this further affidavit, Mr Hancock speaks about the desirability of proceeding on behalf of all plaintiffs in one action.

The Effect of the Evidence

24. Reading the evidence, it is immediately apparent that, given that Mr Hancock had difficulties, there came a time when he was ready to proceed with the service of the writ on the defendants before me, followed shortly afterwards by the statement of claim and the other documents. When that time was is of crucial importance in determining whether or not the plaintiffs needed an extension of the period of the validity of the writ in order to effect that service. Whether or not the plaintiffs needed an extension is relevant because, of course, if an extension was not needed, there could be no good reason to grant one. There is no clear statement in the evidence of Mr Hancock from which it is possible to find out when that time was.

25. The information given by Mr Hancock as to the progress of his work leading up to the time when he was ready to serve the writ, the statement of claim and the other documents is deficient. It may be that there is some excuse for the sparsity of information when he applied to the Master. He was under pressure. He believed he had to get an early hearing. He was working hastily; indeed, he says that he made a mistake because he did not read his papers. But when he became aware that the matter was to be seriously contested, and he had more time to do the job properly, I believe he should have given me much more detail. It was, or should have been, clear to Mr Hancock that the timing of events was of great importance in establishing that an extension had been needed, and that there was good reason for an extension. When was it decided that the writ would not be served immediately? When did he complete his investigations so that he could decide against which defendants to proceed? When was it decided to proceed against the defendants before me? When was counsel instructed to draft a statement of claim? When was the draft returned? When was leading counsel instructed to settle it? None of these questions is answered by Mr Hancock, and he has had ample opportunity to answer them. He did, indeed, file an additional affidavit, as I have said, but little or nothing was said to help me decide that there was good reason for extending the validity of the writ, or that an extension was needed. Answers to the questions I have posed are crucial. There is absolutely no point in talking about the difficulties involved in a case if these difficulties did not prevent the service of the writ within the validity period, and I cannot know if they did unless I am told when the difficulties were overcome.

26. Mr Hancock says - "Despite these difficulties, decisions have now been made as to which of the Defendants are to be proceeded against and counsel has now prepared a draft Statement of Claim." His attention was drawn directly to the fact that he does say when these decisions were made. On 10 November 1994, McKenna & Co, acting for the eighteenth defendant, wrote to him and asked specifically for this date. Mr Hancock's reply did not give this information. McKenna & Co wrote again, saying that they took it that it was admitted "that there was never any real doubt that your client would be pursuing our client (or that if there was ever such doubt, it was resolved a long time ago)". Mr Hancock responded by saying "There was always doubt", which is unhelpful in view of the fact that he himself indicates in his affidavit that, at some stage, the doubt was resolved.

27. There is nothing in the evidence given by Mr Hancock that enables me to say that, at the stage when he was ready to proceed, he could not have served the writ within the validity period, and followed this up, within the time allowed by the rules, with the statement of claim and the other documents. In fact, what evidence there is tells against this. Mr Hancock says that counsel had prepared a draft statement of claim by 18 October 1994, so he must have been ready to proceed some time prior to this. We know that, in respect of all the defendants involved before me, Mr Hancock was able to effect valid service within a few days, even when he had the luxury of a 12 months extension. It is highly probable that, especially spurred on by the urgency of the matter, he could have effected such service before 22 October 1994.

28. In his further affidavit, Mr Hancock spoke at some length about what Mr Sarony referred to as a "holistic" approach, but nothing he says goes anywhere towards giving any sort of reason, good or otherwise, as to why the writ could not have been served within the validity period, followed, shortly afterwards, by the other documents.

29. Mr Hancock places great stress, in his "holistic" approach, on the desirability of informing the defendants of the whole case against them. The most recent medical report served with the statement of claim was dated 11 May 1993; some eighteen months before the statement of claim was served. This was not likely to enable a defendant "to assess his liability and quantum without more".

30. Mr Hancock says that "the object of the new approach to Personal Injuries Practice and Procedure is for the plaintiff to serve together with his fully particularised Statement of Claim, a Statement of Special Damage and Medical Reports which are collectively such that the defendant may accurately assess his liability and quantum without more upon receipt of the Statement of Claim and Statement of Special Damage". There is, of course, no rule or practice that requires these documents to be served with the writ, and Mr Hancock does not suggest that there is. Mr Sarony argues that Mr Hancock's "holistic" approach to this personal injuries action was entirely sensible. That may well be so, but provides no acceptable explanation at all for the failure to serve the writ within the validity period, followed up by service of the other documents as envisaged by the rules. Even if it were not possible to serve the statement of claim and the other documents shortly after service of the writ, Mr Hancock, in my judgment, should have concluded, with time running against him, no matter that he thought it was desirable to serve the statement of claim and the other documents with the writ, that it was necessary to sacrifice the better for the good and serve the writ before the expiry of the initial period of validity.

31. Mr Sarony spent some time pointing out the difficulties involved for Mr Hancock in preparing the case for the plaintiffs, but, even accepting everything that is said in that regard, there is still no reason, good or bad, for the failure to serve the writ when Mr Hancock was ready to do so. Mr Sarony says in his written skeleton argument that - "The Plaintiffs are not saying that they need an extension due to difficulties they were having preparing the case. The Plaintiffs were saying they required an extension in view of the difficulties they had had." (My emphasis). I understand what is being said, but the point is that, on the evidence, the plaintiffs did not need an extension in view of the difficulties they had had, or, at least, they have not, by full disclosure of the timing of events, established that they required the extension. On the probabilities, the plaintiffs could have served the writ within the period of validity after the difficulties had been overcome, and then followed this up, within a short time, by service of the other documents. If, of course, the plaintiffs did not need an extension, then logically there can have been no good reason for an extension.

Conclusion

32. I have to conclude, to my regret, that was no good reason for the extension. The order of the Master allowing the extension is discharged. It follows that the service of the writ on the defendants before me is bad and must be set aside. There seems no reason why the defendants should not have their costs, and I make an order nisi accordingly.

Comment

33. I have to say that my personal sympathy in this matter is with the plaintiffs. I know that disabling them from proceeding against the defendants before me is a serious blow to them. I also appreciate that my decision may have some consequences to Mr Hancock and his firm. And all because of a few days. I agree with Mr Franklin that this consequence seems harsh. If I had had a totally unfettered discretion to condone the extension without the need for there to have been a good reason for it, I would have exercised it in favour of the plaintiffs. If I had been able to find a good reason, I would have done so. I have searched hard for one, but, on the evidence before me, it does not exist. This conclusion saddens me, but I am bound to apply the law as it is.

(J.K. FINDLAY)

Judge of the High Court