THE SUNSHINE CAPITAL INVESTMENT LTD. AND ANOTHER v. DAIWA SECURITIES (HK) LTD. AND ANOTHER

1991, No. A5582

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

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JUDGMENT

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1. On 11 August 1998, the defendants issued a summons seeking an order that the plaintiffs' action be dismissed for want of prosecution. On 26 November 1998, the Master granted the order sought. The plaintiffs now appeal against this order.

2. The basis on which the defendants' application should be considered is that stated by Lord Diplock in Birkett v James [1978] AC 297, at 318 -

"The power should be exercised only where the court is satisfied . . . that 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 . . ."

3. The period of delay by the plaintiffs for which there is no excuse is calculated by Mr Huggins to be nearly four years between 22 April 1994 and 25 March 1998, and another period of some two and a half months from 26 May 1998, when the defendants gave notice of an intention to apply to strike out for want of prosecution, and 12 August 1998, when the summons to strike out was filed. This, I accept, was an inordinate and inexcusable delay. Mr Chang does not seriously challenge this.

4. Before proceeding to consider the substantial risk aspect, I should deal with an argument raised by Mr Chang, which, it might be said, puts a gloss on the statement from Birkett v James that I have quoted.

5. Mr Chang relies heavily on County and District Properties v Lyell [1991] 1 WLR 683 for the proposition that, if the defendants have done something positive that has the effect of inducing in the mind of the plaintiff a belief that the defendant is consenting to the action being allowed to proceed and the defendant was not going to apply to dismiss for want of prosecution and the plaintiff has been prejudiced, the court does not have the right or power to dismiss the action. This case does say that, and, as Mr Chang submits, it says it in strong terms, but that case has, in equally strong terms, been found to have been wrongly decided in Roebuck v Mungovin [1994] 2 AC 224. At page 236, Lord Browne-Wilkinson, with whom all the other Law Lords agreed, said -

"I therefore reach the conclusion that Lyell's case . . . should be overruled. Where a plaintiff has been guilty of inordinate and inexcusable delay which has prejudiced the defendant, the subsequent conduct which induces the plaintiff to incur further expense in pursuing the action does not, in law, constitute an absolute bar preventing the defendant from obtaining a striking out order. Such conduct of the defendant is, of course, a relevant factor to be taken into account by the judge in exercising his discretion whether or not to strike out the claim, the weight to be attached to such conduct depending upon all the circumstances of the particular case."

6. Lord Browne-Wilkinson pointed out that, where the defendant's actions are minor as compared with the inordinate delay of the plaintiff and there was no major additional expenditure, the judge is likely to attach only slight weight to this factor.

7. The situation in this case is that, after the plaintiffs had been guilty of inordinate and inexcusable delay, the first defendant obtained additional time to answer some interrogatories administered by the plaintiffs. This was late April 1998. On 26 May 1998, the defendants told the plaintiffs that they intended to apply to strike out the claim. I find that the defendants' action was minor. As to additional expenditure caused by this minor action, there is no evidence from the plaintiffs that any additional expenditure at all was incurred, and the items of cost suggested by Mr Chang were not occasioned. If any additional expenditure was incurred, it must have been minor. Accordingly, in my view, this factor should be given only slight weight.

8. On the aspect of the risk that it is not possible to have a fair trial, there can be no doubt that important, probably decisive, issues in this case would fall to be resolved by the trial judge by his assessment of the credibility of the oral evidence. Of course, he will be assisted in this by using such tools as the probabilities and the contemporaneous documents, but his impression of the reliability of the witnesses will be an important factor. The cases establish, if one needs cases to establish something that is within the experience of every lawyer involved in trial work, that delay in bringing a case to trial means that memories of witnesses will fade, and details of conversations and events that once were fresh in the mind disappear. These details, as we all know, are important; they are, as Mr Huggins said, the flesh that adds veracity to the bare bones of a witness's testimony. These details, amongst other things, are used by the judge of fact to test whether or not the witness is telling the truth. Where one witness says "What happened was A, but I cannot recall the details or surrounding circumstances" and another witness says "No; what happened was B, but I also cannot remember any more", the trial judge has a much more difficult job in deciding which version he should accept. This is all the more so if a witness is obliged to say that he cannot remember an incident at all, but relies on what he would have done in a given situation. Of course, these problems affect a plaintiff as much as a defendant, but the plaintiff is deserving of less sympathy because he has brought the problem on his own head. The events about which the witnesses in this case would testify occurred some twelve years ago. How could any person say, with honesty and confidence, that he is able to recount reliably the details of incidents that happened so long ago? I accept, of course, that the memories of witnesses may have already dimmed before the start of the four year period for which the plaintiff is to be blamed, but it must be so that further loss of recollection has occurred during those four years. In Roebuck v Mungovin, Lord Browne-Wilkinson said, at page 234 -

"Where there are two periods of delay, how can it be shown that a witness has forgotten during the later, rather than the earlier period? [He refers to an unreported decision] where there was a difference of opinion as to whether in such cases it was necessary to adduce specific evidence that the prejudice flowed from the loss of memory in the later period. I have no doubt that such evidence is not necessary and that a judge can infer that any substantial delay at whatever period leads to a further loss of recollection. But even so the attempt to allocate prejudice to one rather than another period is artificial and unsatisfactory."

9. This is no more than common sense. It cannot possibly be said sensibly that, on a given day, a witness could remember, but, on the next day, he could not. Memory fades gradually, not overnight.

10. So, if there was "a substantial risk that it is not possible to have a fair trial of the issues in the action" even on 22 April 1994, when the period of inordinate and inexcusable delay started, as there must have been, this does not aid the plaintiffs because now that substantial risk has undoubtedly greatly increased by the "further loss of recollection". Naturally, a judge will give little or no weight to a short period of additional delay because the further loss of recollection will be slight, but where, as here, that period of additional delay is some four years, the further loss of recollection must be considerable, and so considerable that I am persuaded to exercise my discretion to accede to the application to dismiss the plaintiffs' action. The weight to be attached to the defendants' action mentioned earlier is quite insufficient to persuade me that any other result would be just.

11. Accordingly, the appeal is dismissed. The plaintiffs' action is dismissed.

12. The matter of costs has not been argued, but there seems to me no obvious reason why costs should not follow the event. I make an order nisi that the plaintiffs pay the costs of the action, and of this application here and below.