XCHRX KINGLY COMMODITIES CO. LTD. v. KANG CHONG SOO

HCCL28/88

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

COMMERCIAL LIST NO.28 OF 1988

---------------

---------------

____________________

J U D G M E N T

____________________

1. There is before the Court a summons issued by the Defendant for an order that this action be dismissed for want of prosecution and/or on the ground that it is an abuse of process of the Court, and for the consequential relief that the Defendant be at liberty to take out the sum of HK$1 million which was paid into Court on 3rd June 1988 pursuant to the Order of Nazareth J. (as he then was) dated 22nd June 1988, together with all interest accrued thereon. The application is backed by an affirmation of the Defendant, Mr Kang Chong Soo, affirmed on 24th September 1998. No affirmation in reply has been filed by the Plaintiff company, thereby substantiating the view that the Plaintiff company's position is extraordinary in terms not only of the historical background which has given rise to this application, but also in terms of its lack of reaction in response to this application.

2. The Plaintiff is represented by Mr Liu of Messrs Tang & So. Mr Liu has greatly assisted the Court with his frankness in what is for him a difficult situation. He tells me that his firm lost contact with the client since about April 1989, although his firm remains on the record, albeit with no instructions. He believes that the case is one which was formerly handled by his senior partner, and he understands also that his partner remains in contact with one of the directors of the Plaintiff, so that the situation, therefore, is that he is able to assure the Court that the Plaintiff is aware of the existence of this summons, and has been so since September 1998. Despite this fact, however, Mr Liu appears today with no instructions, and he has been honest enough to tell the Court that his firm's client has been warned that if no instructions were obtained, his firm would apply to withdraw their representation and to cease to act. As things stand, however, no application has yet been made, perhaps with an eye to saving costs because it was, I think, considered that if the application was dismissed, such an application for practical purposes would be rendered otiose.

3. Be that as it may. Mr Liu therefore appears today solely to explain the situation and to render to the Court what assistance he can. He has told me that the Plaintiff company is still in existence, certainly in terms of the latest company search dated 9th October 1998, wherein its registered address is listed as 2nd floor, 18 Upper Station Street, Hong Kong, although he is unaware if the Plaintiff remains a member of the Stock Exchange, or if it continues to trade. So far as the Plaintiff is concerned, therefore, its apparent situation today is entirely consistent, in my view, with its lamentable conduct of this litigation, to the details of which I shall shortly turn.

4. Mr Peter Ng, who appears for the Defendant/Applicant, has told the Court that these proceedings are an offshoot of the 1987 stock market crash. In particular terms, the present claim by the Plaintiff against the Defendant was a claim for the debit balance allegedly standing in the Defendant's commodities trading account with the Plaintiff, and that the sum allegedly due and owing is in the region of HK$22 million. That, therefore, was the genesis of this action, a Writ and Statement of Claim being issued on 5th December 1987. From a perusal of the most useful chronology of proceedings provided by Mr Ng, it seems that the early part of 1988, at least, was taken up with various applications involving Prohibition Orders which were variously obtained by the Plaintiff against the Defendant. The last such substantive order seems to have been that made by Master Jennings on 8th March 1988, which was extended by the Order of Sears J. on 30th March and again by Order of the same Judge on 4th May 1988. In fact, the saga of the Prohibition Orders was brought to an end by Order of Nazareth J. (as he then was) whereby, by consent, it was agreed between the parties that the Defendant do pay into Court the sum of HK$1 million as security within two days, and that the Prohibition Order then in place be discharged forthwith upon payment into Court of that sum. Notice of Payment into Court in terms was filed on 3rd June 1988.

5. The only other matter of note occurring in 1988, a matter upon which Mr Ng bases one of his arguments in this application, was the further Order of Sears J. dated 14th March 1988, whereby the learned Judge ordered that there be mutual discovery within 14 days, inspection seven days thereafter and, more importantly in the present context, that the action be set down in the Commercial List for trial within 42 days of such Order.

6. Thereafter, very little indeed happened in this case. In March 1989, there was a request for further and better particulars of the Reply and Defence to the Amended Counterclaim and of the Further and Better Particulars provided by the Plaintiff on 30th May 1988. A summons dated 12th September 1989 was in fact taken out by the Defendant for such particulars, but was adjourned by consent on 18th September, such summons standing adjourned sine die with liberty to restore. That was the sum total of the activity in the case for 1989.

7. 1990 saw even less activity. On 19th July 1990, voluntary particulars of the Further and Better Particulars of the Reply and Defence to Counterclaim were served by the Plaintiff, and that, in fact, appears to be the final act of the Plaintiff in this case. Thereafter the Defendant, as was its right, acted like the proverbial "sleeping dog", and the silence has been punctuated only by the application with which the Court is presently seized, namely the Defendant's summons dated 25th September 1998 to dismiss the action and to obtain an Order for the payment out of the monies which had been paid into Court a decade earlier. I have rarely encountered a more significant case of delay and inaction, rendered in my judgment the more lamentable because of the rash of Prohibition Orders which consumed much of the Court's time during 1988.

8. It is against this background that Mr Ng mounts this application with the assistance, if I may say so, of an excellent skeleton argument which in short form provides the Court with all the relevant information that is required in an important application of this nature. Mr Ng asks for the relief presently sought on three distinct bases. First, he cites Birkett v. James [1978] AC 297 (HL) and relies upon both principles within that case, namely, where the Plaintiff has been guilty of its intentional and contumelious default in terms of disobedience to a peremptory order of the Court or conduct amounting to an abuse of the process of the Court, and second (and the more well-known head) where there has been inordinate and inexcusable delay on the part of the Plaintiff or his lawyers, and that such delay will give rise to a substantial risk that it is not possible to have a fair trial of the issues in the action or is such as is likely to cause, or to have caused, serious prejudice to the Defendants.

9. In addition, Mr Ng runs a second argument independent of the well-known Birkett v. James rubric, namely, on the basis of the decision by the House of Lords in the recent case of Grovit v. Doctor [1997] 1 WLR 640, wherein their Lordships held that irrespective and independent of any question of delay, an action may also be dismissed where the Court is satisfied that the conduct of a Plaintiff amounts to an abuse of the process. In this regard, I can do no better than quote the part of the judgment of Lord Woolf (op.cit. at 647F) :-

" Even without this surprising late development, I am satisfied that both the deputy judge and the Court of Appeal were entitled to come to the conclusion which they did as to the reason for the appellant's inactivity in the libel action for a period of over two years. This conduct on the part of the appellant constituted an abuse of process. 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. In this case once the conclusion was reached that the reason for the delay was one which involved abusing the process of the court in maintaining proceedings when there was no intention of carrying the case to trial the court was entitled to dismiss the proceedings. ....."

10. On the basis of the evidence before the Court, and after examining the chronology of relevant events, part of which I have set out above, I have no hesitation in concluding that in continuing this litigation, the Plaintiff, at least since 1990, has demonstrated a clear intention not to bring the action to a conclusion, and that such constitutes a manifest abuse of process.

11. On the facts of the present case, the Plaintiff's default and delay in prosecuting its claim is quite extraordinary, a much overused word but one which in this case, I think, is justified. As Mr Ng points out, over 11 years have elapsed since the issue of the Writ of Summons in December 1987, the Order of Sears J. of 14th March 1988 that set down for trial within 42 days was completely ignored, between June 1988 and July 1990 the only step in the proceedings taken by the Plaintiff was the filing of its voluntary particulars of the Further and Better Particulars of the Reply and Defence to Counterclaim, and that after July 1990, there was no activity whatever. No notice of intention to proceed had ever been served, and no evidence has been filed by the Plaintiff in response to the Defendant's present application. Moreover, as Mr Ng also submits, the Plaintiff's default is compounded by its declared intention on affidavit to apply to set this case down for trial as soon as possible in 1988; these affidavits I am told were part of the evidence filed in support of the Prohibition Orders which were obtained by the Plaintiff against the Defendant, and presumably were sworn in the context of a situation in which the Court naturally wished to be satisfied that if it was to make draconian orders of this nature against the Defendant, then the merits of the dispute should and would be brought speedily to trial. Manifestly this did not happen and, as I have said, I have no doubt whatever from the history and circumstances of this case that at some stage in the late 1980's or in the early 1990's the Plaintiff formed the firm intention just to forget about the whole matter.

12. Accordingly I find, on the facts and evidence before me, to which there has been no dispute whatever, that Mr Ng's application is made out on all three bases relied upon, namely, the two heads of Birkett v. James together with the independent head of abuse of process in terms of the House of Lords judgment in Grovit v. Doctor, op.cit. It follows, therefore, that I have no hesitation in dismissing this action, and I would further comment, against the background and history of these proceedings, and in particular in light of the interference with the personal liberty of the Defendant, that this action is dismissed by the Court with a real sense of concern given the Prohibition Orders which the Plaintiff repeatedly sought and obtained, and the fact that a significant sum of money was ordered to be paid into Court as the price for the release of the imposition of such restrictions.

13. My Orders on this application, therefore, are as follows :-

(1) That the action herein be dismissed;

(2) That the Defendant be at liberty forthwith to apply to take out the sum of HK$1 million, together with all interest accrued thereon, which monies presently stand in Court pursuant to the Order of Nazareth J. dated 2nd June 1988.

14. I will hear Counsel as to costs.

[Submissions from Mr Ng of Counsel]

15. I have now had the advantage of hearing from Mr Ng on costs, Mr Liu choosing to make no submission thereon.

16. In light of the tenor of this judgment, and in particular of the Court's comments in the context of abuse of process, Mr Ng asks for the costs of and occasioned by this action on an indemnity basis. He cites general principles in addition to the well-known decision of Godfrey J. (as he then was) in OTB v. Coopers and Lybrand [1991] 1 HKLR 177. He draws my attention, further, to the fact that the costs order in Grovit v. Doctor, op.cit., was also an order for costs on an indemnity basis.

17. It seems to me, and with this Mr Ng does not demur, that the proper order for costs in these circumstances is as follows, namely, that the costs of and occasioned by this action be paid by the Plaintiff to the Defendant, such costs to be taxed if not agreed, upon the basis that the costs of and occasioned by this action from the date of its inception on 5th December 1987 to the end of 1990 to be taxed (if not agreed) and paid on a party-and-party basis, and that all costs thereafter, that is from 1st January 1991 to the conclusion of this case today, 6th January 1999 (including, for the avoidance of doubt, the costs of and occasioned by the present application), be taxed (if not agreed) and paid upon an indemnity basis. This seems to me to accord with the substantial justice of this case.

18. As a final comment, I am far from sure whether, against a background such as the present, involving the obtaining of Prohibition Orders and the consequent payment of monies into Court, that it was necessarily appropriate for the Plaintiff's solicitors simply to adopt the posture that they did, absent instructions from client. However, I will say no more because I have not had the benefit of argument on the point, and because Mr Liu, whom I repeat has done his best to assist the Court in every way in this rather unfortunate situation, has told the Court that prior to attending today he had perused the Solicitors' Code of Conduct and had found nothing to indicate that there was anything untoward or inappropriate in the action that has been taken by his firm to-date. For present purposes, therefore, I will accept his assurance and leave it at that.

19. I thank Counsel for their considerable assistance.