TANG PING KWAN v. TANG KAI TUNG

CACV 162/2011

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF APPEAL

CIVIL APPEAL NO 162 OF 2011

(ON APPEAL FROM HCA 1705 OF 1998)

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REASONS FOR DECISION

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Hon Hartmann JA:

1. I have read in draft the judgment of Barma J giving reasons for our dismissal of the Plaintiff’s appeal. I am in complete agreement with it.

Hon Lam J:

2. I have read the judgment of Barma J in draft and agree with it.

Hon Barma J:

3. This was an appeal by Tang Wai Lun, the personal representative of the estate of Tang Ping Kwan, deceased, the Plaintiff in these proceedings, against the decision of Yam J given on 29 June 2011, affirming the order of Master S Kwang dated 11 March 2011 striking out the Plaintiff’s claim on the ground of inordinate and inexcusable delay.  At the conclusion of the appeal, we dismissed the appeal with costs to the Defendant, with reasons to be handed down later.  These are the reasons for our decision.

4. These proceedings were commenced by the Plaintiff’s father, the late Tang Ping Kwan, on 5 February 1998, against the Defendant, Tang Kai Tung, as manager of the Tang Yuk Cho Tso (“the Tso”). They concern the title to certain land in the New Territories, known as Lots Nos 137, 168, 915, 961, 1109 and 1144, all in Demarcation District No 109 (“the Lots”).  According to the Statement of Claim:-

(1)  The Plaintiff’s grandfather acquired the Lots from a Tang Chong Ming, the then trustee of the Tso, under two Conveyances on Sale dated 28 December 1936 and 26 January 1937 respectively.

(2)  Notwithstanding that the consideration for the Lots had been paid, Tang Chong Ming did not effect a transfer of the registered title to the Lots prior to his death, which occurred shortly thereafter.

(3)  The Plaintiff’s grandfather passed away in 1939, whereupon his interest in the Lots devolved upon the Plaintiff’s father.

(4)  From the time when the conveyances were made, the Plaintiff’s grandfather and his family, and after his death the Plaintiff’s father and his family, had exclusively occupied the lots, adversely to the interests of the Tso, so that the Plaintiff’s father acquired title to the Lots by adverse possession in about 1957.

5. On this basis, the Plaintiff’s father claimed declarations as to his title to the Lots and specific performance of the Conveyances on Sale.

6. The proceedings were contested by the Defendant, who had become the manager of the Tso in about 1996 (it seems that proceedings were not brought earlier because until the Defendant became manager of the Tso, the Tso had for many years had no managers).  On 2 April 1998, the Defendant filed his Defence, denying the Plaintiff’s father’s claims, on the basis that such claims were time-barred, and also on the basis that the signature of Tang Chong Ming on the conveyances had been forged.  It was also alleged that the Plaintiff’s father was not in fact in possession of the Lots.

7. Following discovery, an order was made by Mr Registrar Betts on 14 September 1998 for the exchange of factual witness statements, and experts’ reports on handwriting.  However, these directions were never complied with, and apart from the filing of a supplemental list of documents in November 1998, no further steps in the proceedings took place until 2001, when, the Plaintiff’s father having died earlier that year, an order was made on 5 September 2001 appointing the Plaintiff to be the personal representative of his father’s estate for the purposes of the proceedings.

8. Thereafter, the action again went to sleep, no steps being taken from the making of that order until 19 March 2010, when the Defendant filed a notice of intention to proceed, which was followed on 23 April 2010 by the application to strike out which has led to this appeal.

9. Thus, no meaningful steps in these proceedings were taken between November 1998 and April 2010, a period of over 11 years – some 2 years and 9 months of the delay being prior to the order appointing the Plaintiff as his father’s personal representative, and some 8 years and 8 months of delay occurring thereafter.

10. During the first period of delay, two important witnesses for the Plaintiff passed away – these were the Plaintiff’s father (who died in 2001), and his mother, Madam Law Mui, who also died in early 2001. During the second period of delay, the Defendant’s key witness, a Madam Ngan (who had been the concubine of the Plaintiff’s father, and who had lived at the Lots since about 1936), who would, according to the Defendant, have been able to give evidence favourable to his case, also died, passing away in January 2010.  The result of the delay is therefore that none of the witnesses who could have given relevant evidence from their own knowledge were available any longer.

11. It was against this background that Master Kwang accepted that there had been inordinate and inexcusable delay which had caused prejudice to the Defendant, and struck out the claim.  Yam J took the same view, and dismissed the appeal to him against the Master’s decision.

12. Before us, Mr Kenneth Wong, appearing for the Plaintiff, conceded (in my view, quite rightly) that there had been inordinate and inexcusable delay, and that the delay had prejudiced the fair trial of these proceedings, as a result of the deaths of the witnesses to whom I have referred.  However, he contended that notwithstanding this, the action should not be struck out, for two reasons:-

(1)  First, he submitted that the claim for specific performance of the conveyances was still not time barred, as the result of the provisions of section 4(7) of the Limitation Ordinance, so that the striking out of the claim would serve no useful purpose, as the Plaintiff could simply bring a fresh claim thereafter.

(2)  Second, he suggested that as the Plaintiff was in possession of the Lots, and there was no counterclaim for possession, he would simply remain in occupation, so that the question of adverse possession would remain unresolved.  This, he submitted, was an unsatisfactory state of affairs, so that it would be better to allow the action to proceed in order to enable it to be determined.

13. I do not think that either of these arguments is well founded.

14. As to the first argument, I would accept for present purposes that it is at least arguable that the Plaintiff’s claim for specific performance is not time-barred.  However, while it has long been thought that the non‑expiry of a relevant period of limitation was generally decisive (in the absence of contumelious conduct, such as disobedience of a court order, amounting to an abuse of the process) against the striking out of proceedings for want of prosecution, the Court of Final Appeal has recently restated the principles applicable to such applications in The Liquidator of Wing Fai Construction Company Limited (in compulsory liquidation) v Yip Kwong Robert and others [2012] 1 HKLRD 589 to make it clear that the non-expiry of the relevant limitation period should not inhibit the court from making an order to strike out.

15. Ma CJ, having stated that striking out should be regarded as a remedy of last resort, only to be used when truly justified, dealt with the nature of the jurisdiction to strike out proceedings as follows (at paragraphs 75(2) to (3) of the judgment):-

“75. …

(2) Abuse of the process of the court is the foundation for the exercise of the jurisdiction to strike out for delay.

(3)  Abuse can take many forms.  The Birkett v James second limb will continue, where it is proved, to be a form of abuse so that inordinate and inexcusable delay causing real prejudice would be an abuse.  Thus, where a delay which is inordinate and inexcusable causes a substantial risk that a fair trial would not be possible, this is perhaps the most compelling form of prejudice to a defendant: cf Birkett v James at 318C-D.  …”

16. This passage makes it clear that delay leading to real prejudice is a form of abuse of process.  In this case, given Mr Wong’s acceptance of the fact that there has been inordinate and inexcusable delay which has caused real prejudice to the fair trial of these proceedings as the result of the passing away of the three persons who could have given relevant evidence as to the matters in controversy, the situation here is one in which the Plaintiff has abused the court’s process by failing to take any steps to move the proceedings forward during the period of inactivity.

17. In such circumstances, the appropriate course would be to strike out the claim, notwithstanding that the relevant limitation period has not expired.  This was explained by Ma CJ in the Wing Fai case at paragraphs 48 to 50 and 75(10) of the judgment, where he said:-

“48. I now deal with the aspect of limitation periods. In Birkett v James [[1978] AC 297], this was seen to be a critical factor. Where a limitation period had yet to expire by the time an application to strike out for want of prosecution was heard, this was regarded as a powerful factor against striking out. Lord Diplock described it as a matter of “great weight” (at 322D); Lord Edmund-Davies said it would be “quite exceptional (and difficult to imagine)” an action being struck out in such circumstances (at 334B-C). This approach has been followed in Hong Kong:- see, for example, Hongkong & Shanghai Banking Corporation v Kuan Tao Sheng [[1988] 2 HKLRD 585] (para 41 above). The thinking behind these statements was simple: if a plaintiff had simply left it to the last minute to issue his writ, a defendant would have suffered even more delay than was the case where proceedings had started earlier. It was felt that the courts had no power to shorten what was legislated by statute to be the proper period of limitation. …

49. As we shall see (see para 75(10) below, this approach has changed post-CJR. However, even before the procedural reform in England, this facet of the jurisdiction to strike out for want of prosecution was regarded as unsatisfactory. …

50. The effect of non-expiry of the limitation period, which was often a decisive factor to dismiss applications to strike out for delay, was regarded by many as difficult to accept as a matter of principle. Rhetorically, why should a plaintiff who had delayed excessively to the prejudice of a defendant, be able to benefit from the mere fact that the applicable limitation period had yet to expire? True it is that the plaintiff could simply have waited to the last day before issuing his writ, but this surely did not entitle the plaintiff, if he issued his writ earlier, to delay excessively and misuse the court system. As will presently become clear, I believe that this should from now on no longer be the position.

…

75. …

(10)  I have made several references now to the factor of the non-expiry of the limitation period.  From now on, it should be made clear that this should no longer be a factor which will militate against an order for striking out.  I have already referred to some aspects of the administration of justice.  It seems to me wrong as a matter of principle, and certainly not logical, that where a plaintiff has otherwise abused the process of the court, he should be allowed to continue with a stale action simply on the basis he would be free to institute another action within the limitation period.  In Birkett v James, Lord Diplock recognized that where abuse occurred, the non-expiry of the limitation period would not enure to the benefit of the defaulting plaintiff: at 320H-321A.  Where there is abuse, the court ought to strike out the action for delay and leave it to the plaintiff to institute fresh proceedings.  Once the plaintiff does so, he may well be met by an application to strike out or stay on the basis that the fresh proceedings, in view of the history, constitute an abuse and should not be permitted to continue: see Arbuthnot Latham Bank Limited v Trafalgar Holdings Limited [1998] 1 WLR 1426 at 1436H-1437A; Securum Finance Limited v Ashton [2001] Ch 291, at 308B-309G.  The burden will be very much on the plaintiff to justify why he should be permitted to carry on with the second action.  At that stage, he has already been given an opportunity to have his claim ventilated before the court or to put another way, he has had the chance to have his day in court, and he must justify a ‘second bite at the cherry’.”

18. Those observations are, I think, entirely apposite here.  I therefore do not think that the fact that the limitation period in respect of some of the Plaintiff’s claims has not expired constitutes a good reason to decline to strike out the proceedings where, as here, an abuse of the court’s process is demonstrated.

19. As to the second point prayed in aid by Mr Wong, the argument was that since the question of adverse possession, and thus title to the Lots, would not be determined if the claim were struck out, things would be left in an unsatisfactory state.  In support of this argument, Mr Wong relied on views expressed by Fok JA (sitting as an additional Judge of the Court of First Instance) in Winpo Development Limited v Wong Kar Fu and others (unreported, 8 February 2011, CFI, HCA 3541/1993). That was a case in which the plaintiff made a claim for possession of land, and the fifth defendant defended on the basis of adverse possession, and counterclaimed for a declaration that the plaintiff’s title had been extinguished.  To that counterclaim, which was in respect of a larger area of land than the plaintiff sought possession of, the plaintiff had brought a counterclaim to counterclaim asserting title to the larger area.  In that state of affairs, even if the claim were struck out, the counterclaim and counterclaim to counterclaim would still proceed, requiring the same underlying issues to be dealt with.  Having considered the position in relation to alleged prejudice as a result of the delay (which Fok JA found to be inordinate and inexcusable), and the effect of the counterclaim and counterclaim to counterclaim, Fok JA concluded (at paragraph 62 of the judgment), that:-

“62. Taking all the above matters into account, I have reached the conclusion that the inordinate and inexcusable delay for which the plaintiff is responsible does not give rise to a substantial risk that it is not possible to have a fair trial of the issues in the action. Furthermore, given the exceptional circumstance of the existence of the 5^th Defendant’s Counterclaim and the plaintiff’s Counterclaim to Counterclaim, which means that the same underlying issue that is raised in the claim stands to be tried in any event, I consider that the prejudice caused to the 4^th and 5^th defendants by reason of the plaintiff’s inordinate and inexcusable delay is outweighed. I wish to stress that this conclusion is not intended to condone the delay on the part of the plaintiff. That delay, as I have held, was both inordinate and inexcusable. But the court is enjoined, under the CJR, in giving effect to the underlying objectives of the rules always to recognise that the primary aim in exercising its powers is to secure the just resolution of disputes in accordance with the substantive rights of the parties: see RHC O.1A r.2(2). In the exceptional circumstances of this case, I consider I should exercise my discretion to allow the plaintiff’s claim to survive this dismissal application.”

20. However, the position in Winpo Development was very different from the position here.  In contrast to the position in that case, where Fok JA held that there had been no risk that there could not be a fair trial of those proceedings, the situation here is that as a result of the death of the three key witnesses, that risk is a very real one in this case, so that the Defendant has (as Mr Wong conceded) suffered real prejudice as a result of the Plaintiff’s delay.

21. Further, in the present case, there is no counterclaim for possession brought by the Defendant.  The position therefore is that, unlike in Winpo Development, the striking out of this action will bring the proceedings to an end, and there will (for the time being, at least) be no issues for determination, rather than a situation in which the issues raised by the claim would have to be determined anyway, in the same proceedings.

22. As Lam J pointed out during the course of argument, this case is (perhaps somewhat unusually) concerned not with possession, but with title, with the Plaintiff seeking to perfect his title to the Lots.  The Plaintiff has had the opportunity to do so, having commenced these proceedings, but he has then conducted them in such a way as to give rise to an abuse of the court’s process.

23. In these circumstances, where there is no indication that the Defendant intends to make a claim for possession (none having been put forward in the 12 odd years that this action was on foot), it seems to me that the appropriate course would be to deal with the Plaintiff’s abuse of process by his extreme delay by striking out the action, and leaving it to the Plaintiff to bring a fresh action if he wishes to do so, in response to which the Defendant may deploy all the arguments that are open to him, including the argument that such fresh proceedings would, in the light of the history, be an abuse of process which should not be permitted to continue.  If, on the other hand, the Defendant should, at some future time, seek possession of the Lots, it will be open to the Plaintiff to run whatever defences he may have open to him, at that point, to such a claim.

24. I therefore do not think that Mr Wong’s second argument provides a reason to refrain from striking out these proceedings either.

25. It follows that the courts below were right to strike out the Plaintiff’s claim, with the consequence that this appeal had to be dismissed.