YAN HOW YEE v. YU KIN SANG PAUL AND OTHERS

HCA 1069/2008

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

ACTION NO 1069 OF 2008

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J U D G M E N T

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Background

1. This is a derivative action which was commenced by a generally endorsed writ on 4 June 2008.  Between that date and 11 November 2008, interlocutory proceedings for a successful injunction application were pursued by the plaintiff and directions for further proceedings of the action were given.  On 11 November 2008 the plaintiff filed a statement of claim and on 23 December 2008 a defence and counterclaim were filed.  This was followed by an application to strike out the counterclaim, which was heard on 17 June 2009 and finally disposed of in favour of the plaintiff on 4 November 2009.

2. Thereafter, and except for solicitors’ correspondence relating to costs, things went quiet until 5 September 2012 (a period of 2 years and 10 months), when the plaintiff filed a mediation notice, followed by a mediation certificate.  I find that these steps were, in effect, steps taken within this action.  The same were served on the defendants but no reply was received.

3. On 2 January 2013 the plaintiff chased for a reply to the mediation notice and took steps to compel the exchange of witness statements.  This was met by the present application to strike out.

The defendants’ case on strike out

4. In short, Mr Kam Cheung, counsel for the defendants, submits:

(1) the plaintiff has sat on the matter for a long time without showing any real intention to bring the proceedings to a conclusion; and

(2) that the defendants are prejudiced in that

(a) their memory of events is impaired;

(b) their personal integrity has been put in question by this action, which has had an adverse effect on their business activities; and

(c) they have suffered prolonged stress and anxiety. 

Mr Cheung for the defendants, however, conceded this morning that the alleged prejudice is not, in his words, “substantial”.

The plaintiff’s position

5. In short, the plaintiff says the action came to a halt because she was unable to provide the necessary funding, but that she is now able to resume participation in the proceedings because her finances have improved. 

6. In answer to the delay point, Mr Ng, of counsel, whilst accepting the delay is inordinate, points to the CJR which requires all parties to take positive steps to advance proceedings, and notes that the defendants too have done nothing.

7. As to prejudice allegedly caused to the defendants, Mr Ng notes that the 1st, 2nd, 3rd and 5th defendants all made substantial affirmations in opposition to the interlocutory injunction application in 2008, from which they can now readily refresh their memories, and that the issues in the action are of narrow compass.

8. Mr Ng further submits that if there was stress and anxiety or adverse consequences to the defendants’ businesses, the defendants could have, but chose not to advance proceedings themselves.

9. As to the warehousing of claims, Mr Ng relies upon the plaintiff’s impecuniosity and her prior enthusiasm to prosecute this case such that it is not, he says, plain and obvious that the plaintiff intended to permanently warehouse the action.

Discussion

10. The approach the court takes in exercising its discretion is set forth in the decision in Wing Fai Construction Co Ltd v Yip Kwong Robert [2012] 1 HKLRD 589.

11. I remind myself that striking out a claim is a remedy of last resort.  Abuse of the process of the court is the foundation for the exercise of the jurisdiction to strike out for delay.  Mere delay is not sufficient to justify a striking-out order.  The delay must be both inordinate and inexcusable and abuse must be shown.

12. The delay by the plaintiff in this matter is, in my view, inordinate and inexcusable.  It is no justification for a party simply to say that it was unable to provide the necessary funding to continue the litigation.

13. However, I accept Mr Ng’s submissions that no abuse is evident here.  For the reasons he has submitted, I do not think that impairment of memory is in play here. Furthermore, the defendants’ own conduct in not advancing this matter and, in effect, letting sleeping dogs lie, is relevant to my exercise of discretion. Any stress or anxiety or adverse business consequences caused to the defendants could, as Mr Ng submits, have been alleviated by the defendants’ advancing the proceedings themselves.

14. As to any allegation of warehousing this claim, I reject the same.  The plaintiff’s conduct and approach to this litigation are not those of a person who has no intention to bring these proceedings to a conclusion.

15. At the end of the day, the question is whether in applying settled principle, in the circumstances it is just to strike out this action.  I conclude that, in all the circumstances, it would not be just to strike out this action and, in my view, a fair trial is perfectly possible.  I am not persuaded to impose conditions as to security for costs, but I leave this matter open for further application.

16. The defendants’ application is dismissed.

(Submissions re costs)

17. I make an order that the defendants to this application do pay to the plaintiff the costs of and occasioned by this application, to be taxed if not agreed.

(Further discussion re costs)

18. I think this bill appears in all respects to be perfectly reasonable.  I make a discount for the fact that this is an order for party-party costs and not indemnity costs and, looking at the matter in the round, I order a sum of $120,000 in costs to be paid by the defendants to this application to the plaintiff within 28 days.

(Discussion)

19. The orders made are as follows:

(1) the application to strike out is dismissed;

(2) the defendants to this application will pay costs summarily assessed of $120,000 to the plaintiff within 28 days.

I give the following directions:

(1) witness statements will be exchanged on or before 13 November 2013;

(2) thereafter, there be liberty to the parties to issue a CMC summons;

(3) the parties have leave to attempt to conduct mediation on or before 18 October 2013.