BANK OF CHINA (HONG KONG) LTD v. HO CHI LUI AND OTHERS

HCA 10239/1999

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

ACTION NO. 10239 OF 1999

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D E C I S I O N

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Introduction

1.  By summons, dated 8 April 2015, the 1^st and 2^nd defendants applied to strike out this action for want of prosecution.

2.  The application was argued before Master K. Lo on 19 January 2016. On 30 May 2016, the Master delivered her oral decision.  She dismissed the strike out application and allowed amendments to the Statement of Claim for which the plaintiff had applied at the same time.

3.  This is the appeal against the Master’s decision.

Background

4.  The 1^st and 2^nd defendants are brothers.  The 3^rd defendant is the 2^nd defendant’s wife.  They were guarantors of the liability of Hanwood Limited (“Hanwood”) owed to Yien Yieh Commercial Bank Limited (“Yien Yieh”).  On 1 October 2001, by virtue of the Bank of China (Hong Kong) Limited (Merger) Ordinance, Cap. 1167, all the undertakings of Yien Yieh transferred and vested in the plaintiff and the plaintiff became Yien Yieh’s successor.

5.  Hanwood defaulted on its debts.  By writ, dated 23 June 1999, Yien Yieh commenced this action to enforce the guarantees.  As appears from paragraph 3 of the Statement of Claim, one guarantee executed by the 1^st and 2^nd defendants jointly was an all monies guarantee with no limit and another guarantee executed by the 1^st and 2^nd defendants jointly was limited to HK$3,000,000 (this was confirmed by the draft Amended Statement of Claim).  The 3^rd defendant executed a separate all monies guarantee.  The total sum claimed against all three defendants was HK$27,063,891.11 plus interest.  The defendants filed a Defence on 13 August 1999.

6.  Towards the end of 1999, Yien Yieh sold a property mortgaged by Hanwood in partial discharge of Hanwood’s debt for $20,700,000.

7.  On 29 March 2000, Yien Yieh applied for partial and interlocutory judgment under Rules of the High Court (“RHC”), Order 14 against the 1^st and 2^nd defendants for the sum of HK$3,000,000, in respect of the guarantee limited to HK$3,000,000, and against the 3^rd defendant in the sum of HK$5,000,000, based on admissions contained in the defendants’ Defence.

8.  I was told by Ms. Lok, the 1^st and 2^nd defendants’ counsel, that the 2^nd and 3^rd defendants commenced acting in person on 6 April 2000 and the 1^st defendant commenced acting in person on 11 April 2000.  Mr. Leung, the plaintiff’s counsel, did not contradict that statement.

9.  On 17 April 2000, Yien Yieh obtained partial judgment in the sum of HK$3,000,000 with interest against the 1^st and 2^nd defendants and in the sum of HK$5,000,000 with interest against the 3^rd defendant.

10.  The plaintiff applied for directions with respect to the balance of its claims and, on 24 May 2000, Master Cannon gave directions for discovery and exchange of witness statements.  The defendants failed to provide discovery and none of the parties produced witness statements.

11.  By summons, dated 24 June 2000, the plaintiff sought an unless order against the defendants with regard to Master Cannon’s order for discovery.  On 3 August 2000, the Registrar ordered that, unless the defendants file and serve a list of documents within 14 days, the defendants’ Defence be struck out and the plaintiff be at liberty to apply to enter final judgment against the defendants.

12.  The defendants did not comply with the unless order but, nevertheless, the plaintiff did not apply for final judgment.

13.  Thereafter, Yien Yieh’s solicitors issued a statutory demand.  In a letter to the solicitors, dated 12 February 2001, the 2^nd defendant argued that, if he was made bankrupt then he could not continue to operate his accounting firm and it would be more difficult for him to repay “the debts owed to your bank”.  He offered to pay monthly installments of HK$20,000 and that the repayment plan should be discussed further in 12 months.  Twelve cheques were enclosed for the payments over the following 12 months.  Yien Yieh agreed to this arrangement.

14.  The statutory demand was not in evidence but, given that the plaintiff had partial judgment, the statutory demand must have related to the partial judgment of HK$3,000,000.  This inference is supported by a List of Customer Indebtedness, dated 20 November 2013, maintained by the plaintiff showing the balance brought forward, as at 21 May 1999, as HK$3,000,000 and a first payment of HK$20,000 received on 15 February 2001.

15.  By letter, dated 15 March 2003, the 2^nd defendant asked the plaintiff to accept HK$10,000 a month.  By letter, dated 3 October 2003, the plaintiff advised the 2^nd defendant that it accepted HK$10,000 per month and that it agreed “... to continue to withhold taking further legal actions against the three guarantors ... .”  The letter’s caption is: “Money owed by ‘Hanwood Limited’ ”.  This caption appears on subsequent correspondence from both the plaintiff and the 2^nd defendant.

16.  By letter, dated 6 May 2005, the 2^nd defendant wrote to the plaintiff asking the plaintiff to stop charging interest.  The 2^nd defendant stated: “As a consequence of the financial crisis, we were indebted to your bank a principal sum of around HK$3,000,000.”  In reply, by letter dated 11 May 2005, the bank stated: “We agree to continue to withhold taking further legal action against the three guarantors ... .  ...  Also, from 10 May 2005 onwards, we agree to stop interest charges in relation to the money owed by ‘Hanwood Limited’.”

17.  In 2006, Hanwood was wound up.

18.  By letter, dated 5 May 2008, the 2^nd defendant asked the plaintiff to continue accepting monthly payments of HK$10,000.  The plaintiff replied, by letter dated 1 August 2008, stating:  “We agree to continue to withhold taking further legal action against the three guarantors ... .  ...  Also, from April 2006 onwards, we agree to stop interest charges in relation to the money owed by ‘Hanwood Limited’.”

19.  The List of Customer Indebtedness shows that the 1^st and 2^nd defendants failed to make payments after March 2012, leaving an outstanding balance of HK$3,018,455.57 including interest.

20.  In June 2013, the plaintiff served statutory demands on the defendants. On 3 September 2013, the plaintiff filed three bankruptcy petitions against the defendants respectively.  The petitions against the 1^st and 2^nd defendants were each for HK$3,018,455.57.

21.  By letter, dated 27 March 2014, the plaintiff’s solicitors advised the 1^st and 2^nd defendants’ solicitors that the plaintiff would withdraw the bankruptcy petitions on payment of the sum of HK$1,455,000.  The solicitors further advised: “For the avoidance of doubt, payment of the aforementioned sum is for settlement of [the bankruptcy petitions] only and the Petitioner reserves its rights against the Debtors otherwise.”

22.  On 31 March 2014, the 3^rd defendant was adjudicated bankrupt and the plaintiff is not pursuing this action against her.

23.  On 25 April 2014, upon leave granted by Madam Justice Mimmie Chan, the plaintiff withdrew its bankruptcy petitions against the 1^st and 2^nd defendants after the 2^nd defendant had paid HK$1,455,000, which he borrowed from family.

24.  On 13 October 2014, the plaintiff filed a Notice of Intention to Proceed with this action.  On 23 October 2014, the 1^st and 2^nd defendants’ solicitors filed a notice to act.  On 26 March 2015, the plaintiff applied to amend its Statement of Claim.  On 8 April 2015, the defendants applied to strike out this action for want of prosecution. 

The defendants’ case

25.  The defendants’ case is that the filing of the Notice of Intention to Proceed is an abuse of process for the following reasons:

25.1   The objective facts show that the plaintiff abandoned the action in 2000 or 2001 and only pursued the partial judgment, knowing that otherwise the plaintiff would be faced with three bankrupts and doubtful recovery; alternatively,

25.2   If the plaintiff did not abandon its claim, it has been warehousing and staging its claims.  The plaintiff has sat on the action for more than 11 years in order to extract as much voluntary repayment under the partial judgment as possible.  Even when the defendants stopped paying after March 2012, the plaintiff did not proceed with the action but commenced bankruptcy proceedings under the partial judgment.  Even after the partial judgment had been settled, the plaintiff waited six months before issuing the Notice of Intention to Proceed and a further five months before issuing the summons to amend.

26.  The defendants note that the plaintiff has been in breach of Master Cannon’s order to file witness statements for 16 years.

27.  The defendants also rely on prejudice.

28.  The first ground of prejudice concerns limitation.  The defendants’ counsel submitted:

28.1   Pursuant to s.4(4) of the Limitation Ordinance, Cap. 347, an action shall not be brought upon any judgment after the expiration of 12 years from the date on which the judgment became enforceable and no arrears of interest in respect of any judgment debt shall be recovered after the expiration of 6 years from the date on which the interest became due;

28.2   If the plaintiff had obtained final judgment in 2000 or 2001, any action to enforce the judgment would be time-barred;

28.3   By doing nothing, the plaintiff has obtained, in effect, a further 12 years in which to enforce a judgment and will earn 6 extra years of interest.  This result is unconscionable and unfair and circumvents the rationale for imposing a time limit for the enforcement of judgments.

29.  The second element of prejudice is that the plaintiff led the defendants to believe that it was enforcing only the partial judgment and, as a result, the 1^st and 2^nd defendants made payments to the plaintiff for 11 years.

30.  The third element of prejudice is that a fair trial is not possible as a result of the delay.  Hanwood was wound up in 2006.  Its documents and records are no longer available.  Witnesses do not appear to be available and, in any event, memories would have faded.

The plaintiff’s case

31.  The plaintiff’s case is that it had not abandoned the action, which is evident (so counsel submits) from the plaintiff pursuing repayment in satisfaction of the partial judgment.

32.  The plaintiff also submits that the defendants have not taken any steps to progress the action, which weighs heavily against an order to strike out.

33.  Regarding warehousing, the plaintiff submits that the mere fact of warehousing is not sufficient to strike out an action; there must be something more, it must be shown that the plaintiff intended to abuse the court’s process.

34.  As to whether a fair trial is possible, the plaintiff submitted that the defendants have not provided any particulars of their contention that a fair trial is not possible but, in any event, the plaintiff submits, the dispute turns upon the construction of the deed of guarantee for which live evidence is not required.  The plaintiff also submitted that the defendants have not taken any action to mitigate any prejudice.

35.  The plaintiff submitted that striking out is a last resort and the court has alternatives available, e.g., depriving the plaintiff of interest.

Legal principles

36.  Before reviewing the principles I should note this action commenced on 23 June 1999, almost 10 years before the coming into effect of Civil Justice Reform (“CJR”) on 2 April 2009.  The Court’s last orders were made on 3 August 2000, including that the plaintiff be at liberty to apply to enter final judgment against the defendants, over eight years before CJR.  Nothing was done by any of the parties for over eight years before CJR, and for over five years after CJR when the plaintiff filed its Notice of Intention to Proceed on 13 October 2014.  I note these periods of delay with reference to the coming into effect of CJR because I shall take into account the principles of CJR as they are to be applied to delay which commenced so many years before CJR and continued for so many years after CJR.

37.  Under RHC O.18, r.19(1), at any stage the court may order pleadings to be struck out on the grounds that they are an abuse of process.  The court also has inherent jurisdiction to dismiss an action for want of prosecution in order to avoid injustice, prevent abuse and preserve the dignity of the Court.

38.  I note that the underlying objectives of RHC O.1A, r.1(1) include ensuring that a case is dealt with as expeditiously as reasonably practicable, ensuring fairness between the parties and ensuring that the resources of the Court are distributed fairly.

39.  Regarding cases which straddle CJR, in Wing Fai Construction Co Ltd v Yip Kwong Robert (2011) 14 HKCFAR 935, Ma CJ noted, at para. 28, that the underlying objectives contained in RHC O.1A apply to all proceedings which were in existence at the time CJR took effect.  At para. 29, the Chief Justice stated:

“The Court is to apply the law that exists today. However, this is not to say that when an evaluation is made of the conduct of a party in proceedings (in the present case to examine the delay that has taken place), the Court then somehow disregards the circumstances and the statutory structure in place at the relevant time. There is a distinction to be made between, on the one hand, the application of the law that applied pre-CJR in determining an application and, on the other, taking into account circumstances prevailing at the relevant time, when making a factual evaluation (such as whether or not delay in proceedings was excusable). There is no inconsistency between a court adopting the latter approach without applying the former.”

40.  The principles to be applied in respect of an application to strike out for delay in the context of CJR were restated by the Court of Final Appeal in Wing Fai Construction Co Ltd v Yip Kwong Robert (2011) 14 HKCFAR 935 per Ma CJ at paras. 64 to 80, in summary and referring to those which are apposite to the present application:

(1)   Striking out should only be used in plain and obvious cases.  It must be plain and obvious that, by reason of his delay, a plaintiff should be deprived of the opportunity to go to trial for the resolution of his dispute with the defendant;

(2)   The foundation for the jurisdiction to strike out for delay must be predicated on an abuse of the process of the court by the plaintiff.  Abuse can take many forms: inordinate and inexcusable delay causing prejudice to a defendant, contumelious conduct or initiating proceedings without any intention to bring them to a conclusion are all examples of abuse;

(3)   When delays do occur, greater use of the court’s powers can, and should in the majority of cases, be made rather than an application to strike out. Striking out should be an application of last resort.  (Earlier in the judgment, at para. 33, the Chief Justice observed that there are many orders that can be made before striking out should be considered and the court is encouraged to consider the many possibilities that lie between doing nothing at all and striking out);

(4)   The Birkett v James second limb will continue 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 is not possible, this is perhaps the most compelling form of prejudice to a defendant.  There may be other forms of prejudice, such as the prejudice caused by proceedings hanging over the head of a defendant, causing anxiety;

(5)   In order for warehousing of claims to justify striking out, it must be clear that the plaintiff is abusing the process of the court.  Where the warehousing of claims indicates that there is simply no intention to bring proceedings to a conclusion or there is a wholesale disregard for the rules or court orders, abuse can be found to exist;

(6)   The courts exist to assist parties to resolve disputes and they should not be used by litigants for other purposes;

(7)   Where abuse is clearly demonstrated, proceedings can be struck out even where prejudice to the defendant cannot be shown;

(8)   As all parties to the proceedings have the obligation to prosecute the proceedings and assist the Court in furthering the underlying objectives of CJR, it would be highly relevant to consider any failure on the part of the parties.  As far as the defendant is concerned, there is no place anymore for defendants “letting sleeping dogs lie”;

(9)   The court must bear in mind its own practical limitations and take into account the fact that there are other litigants who are entitled to have their disputes resolved and their day in court.  The court must also have regard to the prejudice to the due administration of justice if stale claims are permitted to continue;

(10)   Ultimately, the court must ask itself whether, in the circumstances, it is just to strike out;

(11)   In para. 31 the Chief Justice noted that the context of CJR includes the principal themes of (a) ensuring that parties to litigation are brought to a resolution of their disputes as expeditiously as possible, (b) increasing the cost effectiveness of the system of the civil procedure and trying to eliminate delays in litigation; and (c) promoting active case management by the courts not only facilitating the expeditious resolution of disputes but also bearing in mind the position of other litigants and the courts’ own resources.

Disposition

41.  The 1^st defendant states in his first affirmation that the plaintiff’s conduct led the defendants to believe that the plaintiff had abandoned the remainder of its claim.  The conduct relied upon is that, knowing of the defendants’ financial difficulties and their inability to repay the entire debt, the plaintiff asked for repayment of the partial judgment only and later agreed to waive interest accruing on the partial judgment.  The 1^st defendant states that the defendants’ belief was reinforced when the plaintiff did not resume the action when they defaulted on payment but only commenced bankruptcy proceedings in respect of the partial judgment sum. 

42.  The highest that the 1^st defendant can put his case is that he believes the plaintiff abandoned the claim.

43.  By way of explanation for the plaintiff’s inactivity, in his first affirmation, the plaintiff’s Senior Assets Recovery Manager stated only the following:

“6. As the 1^st and 2^nd Defendants executed two deeds of guarantee ... whereby the 1^st and 2^nd Defendants jointly and severally guaranteed all sums owed by Hanwood Limited to the Bank under any banking facilities, all the repayments received from the Defendants were credited to repay the debt due and owed by Hanwood Limited.

7. Given that the Defendants made some repayments throughout the years towards the [partial] Judgment, the Plaintiff was of the view that the present action might be able to settle without the need to proceed further with the present proceedings.

8. However, the Defendants have failed to keep up with the repayment arrangement in respect of the [partial] Judgment, nor settled the rest of their liabilities that are the subject of these proceedings.  The Plaintiff has therefore been advised to continue with the present action.”

44.  The plaintiff’s counsel submitted that this was a sensible approach and had the real potential, if the defendants paid the partial judgment and then settled with the plaintiff as to the balance of the claim, of saving significant time and costs.

45.  In his second affirmation, the Senior Assets Recovery Manager elaborated further:

“11. All repayments received from the Defendants were credited to repay the debt due and owed by Hanwood Limited.

12. Given that the Defendants made some repayments throughout the years towards the [partial] Judgment, the Plaintiff was of the view that the present action might be able to settle without the need to proceed further with the present proceedings.

13. However, no settlement can be reached between the parties and the Defendants maintain their stances that they are only liable for the amount under the [partial] Judgment but not for those that are claimed by the Plaintiff under the present action. The Plaintiff has therefore been advised to continue with the present action.

14. There has never been any understanding, let alone agreement, that the bank would only enforce the interlocutory Judgment and abandon the remainder of the sums due in these proceedings.

15c. It has always been the intention of the Plaintiff to proceed with recovering monies from the Defendants, and when it became clear that the present action could not be settled through negotiation, the Plaintiff resumed the proceedings after withdrawal of the two bankruptcy proceedings.” 

46.  The plaintiff’s counsel told the Court that the reference to “the debt due and owed by Hanwood Limited” in paragraph 11 of the officer’s second affirmation referred to the entire debt, i.e., the partial judgment and the balance of the claim.  If counsel is correct, the defendants’ repayments would have been applied to both the partial judgment and the balance of the claim.  However, the Senior Assests Recovery Manager does not expressly state that the repayments were in settlement of the entire debt but not only does he not say so, in paragraph 12 of his affirmation the bank’s officer states that the Defendants made some repayments throughout the years towards “the Judgment”, referring to the partial judgment. 

47.  Moreover, if the Senior Assets Recovery Manager was attempting to portray a situation in which the plaintiff was applying the repayment installments towards the whole indebtedness, then that portrayal is contrary to the record.  The “List of Customer Indebtedness” kept by the plaintiff, which records the payments received from the defendants and the interest accrued, shows a sum of HK$3,000,000.00 in the column headed “Total Indebtedness”, which can refer only to the amount of the partial judgment.

48.  The plaintiff’s counsel also told the Court that his instructions were that, when the plaintiff agreed not to charge interest, the agreement related to the entire debt and not just to the partial judgment.  In a letter, dated 6 May 2005, after referring to the HK$3,000,000, the 2^nd defendant stated: “I sincerely hope that your bank would consider allowing that the interest charges be stopped in relation to the debts owed by us.”  By letter, dated 11 May 2005, the plaintiff responded: “Also, from 10 May 2005 onwards, we agree to stop interest charges in relation to the money owed by ‘Hanwood Limited’.”

49.  The correspondence is ambiguous.  The Senior Assets Recovery Manager did not say in his affirmations that the plaintiff agreed to stop interest accruing on the entire debt.  In any event, counsel’s instructions are contrary to the “List of Customer Indebtedness” which records interest accruing on the partial judgment sum (HK$3,000,000) only.

50.  I observe that, in his second affirmation, the 2^nd defendant states that the Senior Assets Recovery Manager did not come into contact with him until mid-2012.  The Manager has not set out in his affirmations the history of his involvement in this matter, something which I consider he should have done, given that the matter is some 15 years old.  Furthermore, the Manager has not set out the basis of his knowledge of matters which took place before mid-2012.  Accordingly, I give little weight to the Manager’s evidence and I prefer to refer to the record, particularly the “List of Customer Indebtedness”.

51.  I do not accept that the plaintiff was applying the repayment installments towards the entire indebtedness.  Neither Yien Yieh nor the plaintiff made any attempt to recover the balance of the claim until the plaintiff filed its Notice of Intention to Proceed.

52.  The evidence does not permit me to find that the plaintiff abandoned the balance of its claim but I find that the plaintiff warehoused the balance of its claim.  As this is a single claim, it is not the typical case of warehousing in which a plaintiff commences several actions but chooses to proceed only with a few.  It is warehousing nonetheless in the sense that the plaintiff has put the balance of its claim to one side and has done nothing about it.

53.  Warehousing is evident from the failure to apply for default judgment, the inactivity in respect of the balance for more than 14 years (from the time liberty to apply for final judgment was given to the Notice of Intention to Proceed) and the plaintiff’s acceptance of repayment by installments of the partial judgment only.

54.  The plaintiff’s counsel relied on paragraph 12 of the Senior Assets Recovery Manager’s second affirmation (set out in paragraph 45 above) to argue that the delay was excusable.  I do not agree.  The proceedings were effectively at an end.  The plaintiff only had to apply for final judgment.

55.  The plaintiff has not provided any satisfactory explanation for its inactivity for more than 14 years in respect of the balance of its claim.

56.  Even taking into account that the approach to litigation was different before CJR, I consider that the warehousing of the claim in the circumstances of this case amounts to an abuse of the Court’s process, for which striking out is appropriate for the following reasons.

57.  There has been an obviously inordinate delay in resolving the dispute and, in the absence of any satisfactory explanation, an inexcusable delay.

58.  The plaintiff has not availed itself of the opportunity provided by the Court’s unless order to bring its claim to a resolution as expeditiously as reasonably practicable.  In the 14 years and 2 months between the making of the unless order in August 2000 and the Notice to Proceed in October 2014, the plaintiff did nothing to obtain judgment or to resolve its claim.  Even if one excludes the period before the introduction of CJR the period of inactivity was over five years.  Through that period, the plaintiff continued to receive payment of installments on the partial judgment, commencing in February 2001, without attempting to settle the balance of the claim.  The plaintiff was active with regard to the partial judgment but kept the balance of the claim to one side, only to seek to resurrect it upon settlement of the partial judgment.

59.  Upon the introduction of CJR, the plaintiff was obliged to review its position and to resolve the action in accordance with the underlying objectives of RHC O.1A, r.1(1) but it did not do so and no satisfactory explanation has been provided for its inactivity.  The plaintiff argues that it expressly reserved its rights in correspondence with the defendants but that does not assist the plaintiff.  The plaintiff cannot simply reserve its rights; there is an obligation to deal with the case as expeditiously as reasonably practicable.

60.  Throughout a period of more than 14 years, and whilst the defendants were making repayment, the plaintiff showed no intention to bring the proceedings to a conclusion.  Indeed, this is revealed by the Senior Asset Recovery Manager’s statement in his second affirmation, paragraph 12, that the action might settle “without the need to proceed further with the proceedings”.

61.  When the Court gives a party liberty to apply for final judgment, it does so in the expectation that the party will act on that opportunity to resolve its claim as expeditiously as reasonably practicable.  In my view, it is an abuse of the Court’s process not to act on liberty to apply for final judgment as expeditiously as reasonably practicable but to wait on it for an inordinate and inexcusable length of time.  In this regard I note the Chief Justice’s quotation, at paragraph 55 of Wing Fai Construction Co Ltd, from Lord Woolf’s judgment in Arbuthnot Latham Bank Ltd v Trafalgar Holdings Ltd [1998] 1 WLR 1426:

“...  Whereas hitherto it may have been arguable that for a party on its own initiative to, in effect, “warehouse” proceedings until it is convenient to pursue them does not constitute an abuse of process, when hereafter this happens this will no longer be the practice. It leads to stale proceedings which bring the litigation process into disrespect.”

62.  I also note the emphasis placed by the Chief Justice, at paragraph 75(4), on another passage in Lord Woolf’s judgment:  “The courts exist to assist parties to resolve disputes and they should not be used by litigants for other purposes.” 

63.  For more than 14 years the plaintiff did nothing about the balance of its claim, whilst accepting repayment by installments of the partial judgment sum.  When those repayments stopped, without taking any action in respect of the balance of its claim, the plaintiff proceeded to enforce the partial judgment by issuing separate bankruptcy proceedings.  It was only after the bankruptcy proceedings had been withdrawn on settlement of the partial judgment that the plaintiff sought to proceed with its action to recover the balance of its claim.  I consider the manner in which the plaintiff has used the Court’s process to be an abuse.

64.  I observe also that there is a limitation period of six years imposed on judgments.  The effect of the limitation period is to bring finality to a matter within a reasonable period of time.  By not obtaining final judgment and thereby avoiding the commencement of the limitation period, the plaintiff has extended finality beyond the reasonable period imposed by the limitation period.

65.  Abuse has been demonstrated clearly and there is no need for the defendants to show prejudice. 

66.  The plaintiff’ counsel argued that the defendants did nothing either; that they “let sleeping dogs lie”.  He submitted that the defendants could have written to the plaintiff or applied for directions or an unless order in respect of the plaintiff’s failure to file witness statements.

67.  However, the action was effectively at an end.  The defendants were not taking any further part in the action; their solicitors had withdrawn and they had not filed witness statements or a list of documents.  The last step in the action was for the plaintiff to take.  The defendants were unrepresented throughout the 14 years and they are not lawyers.  They did not instruct solicitors again until after the plaintiff sought to revive these proceedings.  They could not be expected to have understood the nuances of the duty not to “let sleeping dogs lie” or of the court process with regard to prompting a plaintiff to obtain final judgment (see: Kwangtung Provincial Bank v Chung Sun Kwan & anor. [2014] 6 HKC 542, paras. 19.1 and 19.2.

68.  The plaintiff’s counsel submitted that, as he is an accountant, the 2^nd defendant should know where to obtain legal advice and he should have done so.  I am not persuaded to hold the 2^nd defendant to a higher expectation than other non-lawyers simply because he is an accountant.  Most citizens would understand that for legal problems they may consult a lawyer and, yet, the Court of Appeal in Kwangtung Provincial Bank v Chung Sun Kwan & anor. was not prepared to hold that a lay person should be expected to understand the nuances of the post-CJR duty not to “let sleeping dogs lie”.

69.  In my view, the defendants’ inactivity in respect of the balance of the plaintiff’s claim does not excuse the plaintiff’s abuse of the Court’s process.

70.  The plaintiff’s counsel submitted that the Court has options other than striking out and suggested that the Court could deny the plaintiff interest for the period of the delay.  When the Chief Justice reminded the courts in Wing Fai Construction Co Ltd that there are options other than striking out, he was referring to the powers of the Court after the introduction of CJR to manage a case and to keep it moving but, in the present case, the case is at an end but for the plaintiff applying for final judgment.  There is no procedural action open to the Court for case management.  Denying interest is not case management, it is compromising the claim as between the plaintiff and the defendant.  Denying interest is not an answer to the abuse of process, it is only a compromise of the abuse.

71.  For the above reasons, I strike out this action for want of prosecution.

72.  The defendants have been successful in their application and I order nisi the plaintiff to pay the 1^st and 2^nd defendants’ costs to be taxed, if not agreed.