Shum Yuen Nim v. United Fair Agencies Ltd and Others

CACV000045/1990

Practice and procedure - dismissal of action for want of prosecution - principles applicable - writ claiming damages for personal injuries issued close to end of limitation period - further delays thereafter whether defendant established existence of more than minimal additional prejudice resulting from post-writ delay whether evidence sufficient to show that the delay in prosecuting the action would increase the damages likely to be awarded so as to amount to prejudice whether judge's refusal to strike out action was proper exercise of discretion - function of appellate court.

BETWEEN

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Coram: Fuad, V.-P., Clough & Macdougall, JJ.A.

Dates of Hearing: 3 October 1990, 4 and 5 July 1991

Date of Judgment: 5 July 1991

Date of Reasons handed down: 12 July 1991

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JUDGMENT

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Fuad, V.-P.:

1. This is an interlocutory appeal by the2nd Defendant in this action, United Venture Navigation Co. Ltd., ("the Company") against a decision by Mr. James Findlay, Q.C. sitting as a deputy judge of the High Court dated 6th February 1990. On that day he rejected an application by the Company to dismiss the action as against them for want of prosecution.

2. The parties underestimated how long the hearing of the appeal would last. It was not concluded on 3rd October 1990, the single day allocated for it and, for a number of reasons, the hearing could not be continued on the following day. Unfortunately, it was not until 9 months later that suitable dates could be found for the resumed hearing. This was most unsatisfactory. However, when the hearing did come to an end, on 5th July 1991, we dismissed the appeal and now give our reasons.

3. The history of the matter goes back some eight years when the alleged cause of action arose. According to the Statement of Claim, the plaintiff, Mr. Shum Yuen Nim, was serving on board a vessel called The Biakh as her Chief Engineer. The vessel was in dock in the port of E1 Ferrol in Spain. On 24th May 1982 the plaintiff fell to the ground in the berth from the ship's gangway on which he had been standing. The gangway had been fastened to the handrail of the vessel. It is averred that the handrail gave way causing the gangway to rock with the result that the plaintiff lost his foothold.

4. When admitted to hospital in Spain where he was treated, it was found that the plaintiff had a fractured skull, some fractured ribs, a fractured left femur and a fracture of the 4th and 5th thoracic vertebrae. After recovering consciousness he suffered from post-traumatic amnesia for a period of about four weeks. He was flown back to Hong Kong at the Company's expense on 11th July 1982, and on 28th July 1982 underwent neurosurgery, being finally discharged from hospital on 27th January 1983. He had been on sick leave from the date of the accident until then. He attended a rehabilitation centre for a further two months or so.

5. On 26th February 1983, the plaintiff signed a "Letter of Release" in the following terms:

"I, SHUM YUEN NIM, Chief Engineer of the vessel 'BIAKH' having sustained an injury while working on board at E1 Ferrol on 24th May 1982, hereby agree to accept the sum of Hong Kong Dollars Thirty Eight housand and Four Hundred (HK$38,400.00), receipt of which is hereby acknowledged from United Venture Navigation Co, Ltd., of 36th Floor, Hopewell Centre, 17 Kennedy Road, Hong Kong, acting for the owners of the vessel 'BIAKH', in full and final settlement of all claims of whatsoever nature arising directly or indirectly from the said injury which I may have upon any person, company or organisation and I hereby agree that the said sum is paid to me without admission of liability on the part of the United Venture Navigation Co. Ltd. and/or the master of the 'BIAKH' and/or their agents."

The document is witnessed and bears a certificate that its contents have been translated to the plaintiff.

6. Mr. Shum made an affirmation on 24th January 1990 in which he stated that he had worked for the Company for at least seven years. He exhibited a name card printed for him by the Company which bears their name (as well as the name of the 1st Defendant.) He explained in some detail what happened to him after the accident. He paid tribute to the Company for the way in which they had treated him. They had arranged medical treatment for him in Spain followed by further treatment in Hong Kong in a private hospital, covering a period of three months after the accident. And this was followed by the treatment he received at the rehabilitation centre.

7. Mr. Shum said that his doctors had told him that he was lucky to be alive and had made a remarkable recovery. While he was under treatment, the Company had paid him two-thirds of his salary. Dr. Nicholson, who had been treating him, had issued a letter dated 27th January 1983 assessing his permanent disability at 20%, and later a medical certificate dated 25th February 1983 which certified, inter alia, that he was "fit for employment as a Chief Engineer on board a ship".

8. Mr. Shum went on to depose that after Dr. Nicholson had provided the certificate, the Company had advised him that as soon as the matter could be finalised he would be able to resume his career as a ship's first engineer. He was made to understand that the $38,400 he was to be paid was in line with the Employees' Compensation legislation then in force. This was why he had signed the Letter of Release on the day after Dr. Nicholson's certificate - so that he could continue his profession as soon as possible.

9. However, Mr. Shum continues, he was not assigned to any other vessel as the Company's Mr. Iu had led him to believe he would be and in the meantime the validity of the certificate allowing him to be employed as a Chief Engineer on board a vessel had expired. To be employed in that capacity he had to re-sit the relevant examinations in Shanghai. This he had done in May and December 1983 but he had failed the examinations on both occasions.

10. Mr. Shum then states that after almost daily visits to the Company and after pressing Mr. Iu, finally on 11th May 1984 he was posted as 3rd engineer on the Grand Hickory.

11. Mr. Shum's affirmation continues as follows:

"(6)      I finally was able to resume my career at sea but discovered then that I was not fit to carry out my duties properly which entailed checking and carrying out/overseeing minor repairs of the machinery in the engine room which entailed climbing up and down the steel ladders and gangways some three storeys high. I would have sudden attacks of vertigo which I never had before and on several occasions, my strength would suddenly go and I fell. I dared not report such incidents for fear that I would be discharged from the job as unfit but eventually, I realised that I truly could not cope and accordingly left the ship at Osaka, Japan on 13th November 1984 and returned to Hong Kong on or about the same day."

12. Mr. Shum's affirmation concludes by saying that after a brief period of rest, and after talking to fellow-seamen, he had sought advice from the Seamen's Union which had referred him to the Legal Aid Department. The records show that he applied for legal aid on 15th March 1985, and that a legal aid certificate was granted on 9th April 1985.

13. About five weeks before the expiry of the applicable limitation period (3 years -proviso (i) to s. 4(1) of the Limitation Ordinance, Cap. 347), that is to say on 15th April 1985, the plaintiff issued a generally indorsed writ claiming damages for personal injuries. On 15th May 1985 the writ was amended to add the 3rd Defendant.

14. Then on 19th March 1986 the writ was renewed for a further period of 12 months. The Company asserted in one of the affidavits filed on their behalf that the writ was served upon them by post on 4th March 1987, nearly five years after the cause of action arose, and nearly two years after the expiration of the limitation period. On behalf of the plaintiff, Ms. Alison Liu, the Senior Legal Aid Counsel in charge of the matter, refers to an affirmation of service which shows that the Company was served on 17th October 1985 (the contents of that affirmation appear below) and she herself deposes that the renewal of the writ had been applied for "to protect the plaintiff's interests" since the Company's registered office had by the date of that service been vacated. When the appeal was opened, it was common ground that the Company had effectively been served in accordance with the requirements of the Companies Ordinance, Cap. 32 on 17th October 1985

15. A Statement of Claim dated 10th October 1985 was filed on 25th March 1987. By it, the plaintiff claims general and special damages averring that he has permanent disabilities (which are specified) due to the May 1982 accident. It is said that ever since that date the plaintiff had "become unemployed and unemployable."

16. On 23rd June 1987 Mayo, J. dismissed a summons issued by the Company on 12th June 1987 seeking to strike out the plaintiff's claim for want of prosecution.

17. The Company filed a Defence on 7th July 1987. On 16th' July 1987 the plaintiff filed and served a list of documents. The Company did the same on 1st October 1987.

18. Master Jennings made an order on 16th November 1987, on the Company's application that the plaintiff should serve further and better particulars within 14 days. This order was not complied with until 10th June 1988, over six months late.

19. On 9th December 1987 Master Hill made an order by consent requiring the plaintiff, on or before 30th December 1987, to file an affidavit of documents pursuant to R.S.C. 0.24, r.7. As will be seen there was a very long delay in complying with this order.

20. A request dated 21st June 1988 asking for further and better particulars of the particulars supplied addressed on behalf of the Company to the Legal Aid Department never met with a proper response.

21. It was not until 23rd September 1989, by which time over seven years had passed since the accrual of the cause of action, that the plaintiff gave one month's notice of his intention to proceed.

22. On 20th October 1989, the Company issued the summons out of which this appeal arises. It had been due to be heard on 2nd November 1989 but did not, in the event, come before the judge until 1st February 1990. Meanwhile, on 24th January 1990 the consent order which had been made by Master Hill on 9th December 1987 was complied with by the plaintiff, just over two years after the date prescribed by the order.

23. The Company's summons asking for the action to be dismissed was founded upon the inherent jurisdiction; 0.24, r.16 (the plaintiff having failed to comply with the order dated 9th December 1987); and 0.34, r.2 (for failure to set the action down for trial pursuant to 0.25, r.8).

24. The affidavits filed on behalf of the Company in support of the unsuccessful application before Mayo, J. were relied upon again on the application before the Deputy Judge. In his affidavit sworn on 12th June 1987, Mr. Nicholas Bennett, a solicitor acting for the Company, asserted: "For the reasons hereinafter stated, I believe that it will be impossible for the 2nd Defendant's insurers to defend this action properly as a result of the delay that has occurred in prosecuting the action".

25. Mr. Bennett stated that the officers of the Company were not available in Hong Kong to assist the Company's insurers. From the company search report exhibited, it could be seen that Denis Fu Ping Li was recorded as being a director of the Company, that Daniel Fu Chieh Li was his alternate director and that there were no other directors. From reports in the local press appearing in Hong Kong in 1985 and from.discussions with the Hong Kong office of Messrs. Coopers & Lybrand, it appeared that Denis Li has been adjudicated bankrupt in Canada, that their Vancouver office was acting as his trustee, that he was living in Canada and that he had recently applied for his bankruptcy to be discharged. Mr. Bennett had further been informed that his brother, Daniel Li, was also believed to be in Canada. From the press reports he believed that both Daniel Li and Denis Li were in serious financial difficulties, facing claims in the region of 100 million dollars. Press cuttings for the period July 1985 to October 1985 were exhibited.

26. Mr. Bennett then stated that he had interviewed a Mr. Patrick Chow who used to work in the insurance department of. the P.S.Li Group and had been responsible for arranging insurance for vessels in the Group. Mr. Chow had told him that the Li brothers had left Hong Kong in about June 1985. He himself had left the Group in the following month.

27. Mr. Bennett ascertained that the principal shareholder of the Company, Mrs. Alice Li, was also believed to be in Canada. Searches had revealed that no properties remained registered in Hong Kong in the name of any of the Lis.

28. Mr. Bennett went on to say that he had been in touch with the landlords of the Company's registered office in the Hopewell Centre and had learned that certain papers and files had been removed from that office in October 1985 and that thereafter the remaining papers and fides had been disposed of on 21st October 1985 by the cleaning contractors. Neither Coopers & Lybrand nor the official Receiver's office had any papers relating to the P.S. Li Group. He was informed that the insurers of the Company had not been told of the accident to Mr. Shum until 4th February 1987 when they were contacted by the Legal Aid Department. The Company had not notified them.

29. Mr. Bennett summarises the "serious" prejudice put forward on behalf of "the 2nd Defendant and its insurers" as follows:

"This prejudice arises from the disappearance of the directors and principal shareholders of the 2nd Defendant and the disappearance of its records. In addition, they are very seriously prejudiced in their ability to investigate the claim and to locate and interview witnesses both in Spain and amongst the former crew of the vessel who may well be scattered around the world. Their right to claim an indemnity or contribution from third parties ..... is similarly jeopardised."

30. In an affidavit sworn for the present application, Mr. Michael Skrbic, also employed by the solicitors acting for the Company, states that since the Company no longer had any office, management or other personnel in Hong Kong, attempts to find the Ships Articles had failed. For reasons he gave, this was a "potentially probative document" and was no longer available due to the plaintiff's delay in proceeding. Moreover, without the ship's papers it was not possible to identify the Master and members of the crew who might be potential witnesses.

31. Mr. Skrbic also deposed that:

32. Mr. Skrbic added that since The Biakh had been sold for demolition, and insurance cover terminated, on 29th August 1985, an inspection of the physical condition of the ship was now impossible. Spanish lawyers had informed him that none of the 200 or so employees of the ship-yard working in the Repairs Department at the relevant time was still employed by the ship-yard company, following reductions in the workforce.

33. In his reserved judgment dated 6th February 1990 dismissing the Company's summons, the judge ordered that the action be dismissed with costs unless the plaintiff set the action down for trial by 4:00 p.m. on 12th February 1990. The judge remarked that it might have been hoped that the experience of the June 1987 strike out application which had failed:

"....... might have impressed on the plaintiff and his advisers the need to press on with the matter with due despatch, but, unfortunately, it does not seem to have had that effect. There may be what are seen as good tactical reasons for this heel dragging, but, if so, I have not been told what they are, and, consequently, must assume that there is no valid excuse."

34. After referring to a chronology attached to an affirmation filed on behalf of the plaintiff, the judge says that it:

"..... demonstrates that there has been extraordinary delay in proceeding with this matter since early 1986. There is evidence of some desultory activity from time to time, but there are also a number of periods of several months' duration in which, apparently, nothing was done at all. In my assessment, no serious attempt is made in the affirmation to excuse the delay, and Mr. Chung did not really try to do so before me."

There is no challenge by the plaintiff to this conclusion:

35. The judge observed that although the writ did not come to the "mind" of the Company until March 1987, this was not to say that it was not until then that they knew about the accident for they had reported the matter to their insurers on the next day (25th may 1982) and the master had written a report on the incident dated the following day. The Company, said the judge, seemed to have taken all proper steps as a reasonable employer to see that the plaintiff was looked after and treated. Thus, he felt, they and their insurers had every opportunity to undertake such investigations as they saw fit. They should have anticipated that it was highly possible that litigation would ensue, and that a prudent employer (or insurer) would have prepared himself for that event. The master's report made it perfectly clear that the breaking of a handrail had at least contributed to the accident, and that it must have been thought that the Company might be said to be liable on that basis.

36. The judge then said that he had not been told whether, in fact, the Company or their insurers had conducted any investigations beyond receiving the master's report, or, if they had not, why that was so. He could understand, and be more sympathetic to their position if proper investigations had been conducted when it was possible and prudent to do so, and their present complaint had been that witnesses could no longer be traced after the great lapse of time, or that there was an increasing danger that their memories would no longer serve them.

37. Citing Birkett v. James [1978] AC 297 and Dept. of Transport v. Chris. Smaller Ltd. [1989] 2 WLR 578 the judge said that it was clear on the authorities that the time that elapsed between the accrual of the cause of action and the issue of the writ within the limitation period could not constitute inordinate and inexcusable delay. After a reference to a short passage from the speech at p.323G of Lord Diplock in Birkett v. James about the consequences of delay after the issue of the writ, the judge said that in his view it could not be said that the post-writ delay here had resulted in any additional prejudice since there had been no significant subsequent delay until the end of 1985 at the earliest and, by that time, the company and its records had effectively disappeared from the scene. The judge said that if the Company or their insurers had investigated the incident properly when it had the opportunity to do so, they would not now be prejudiced. He added:

"I emphasise that any prejudice suffered by the second defendant must arise from the plaintiff's delay, not from its own conduct. It should also be said that the prejudice must [be] real, not the possibility of some other prejudice that might have arisen even if the second defendant had taken reasonable steps to protect its own interests."

38. As regards the prejudice said to have been suffered by the Company, the judge remarked that it was of no moment that the ship's articles were no longer available. They would not be likely to be relevant to the issues in the action. In any event, in the judge's view, it was unlikely that the articles would have been available when the plaintiff's additional delay became inexcusable.

39. The judge went on to say that he was unimpressed by the Company's inability to trace witnesses. The point was that the Company and their insurers would know who the witnesses were if they had taken the trouble to look after their own interests.The sale of the ship in August 1985, in his view, had no real significance. As regards the "Letter of Release" the judge said:

"I am equally unmoved by the suggestion that the plaintiff's signature to the settlement form in some way induced [the Company] to abandon all measures to ensure that it would be in a position to defend any litigation. I just do not believe that a prudent person would see the execution of this document, in the circumstances of this case, as a trigger for the disposal of records that would, at this stage, assist it in its defence."

40. As we have seen, the judge made a peremptory order against the plaintiff. Although the Company's application was dismissed, he made no order as to costs because the plaintiff has been guilty of inordinate and inexcusable and largely unexplained, delay ...".

41. The limitations of the power of an appellate court to interfere with the discretion of the judge in the court below in a case such as this are well-known and have often been stated and re-stated. I do not think it is necessary to look any further for an authoritative statement of the severely restricted nature of the role of the Court of Appeal than Birkett v. James itself, where at p.317 Lord Diplock said:

"where leave is granted, an appellate court ought not to substitute its own 'discretion' for that of the judge merely because its members would themselves have regarded the balance as tipped against the way in which he had decided the matter. They should regard their function as primarily a reviewing function and should reverse his decision only in cases either (1) where they are satisfied that the judge has erred in principle by giving weight to something which he ought not to have taken into account or by failing to give weight to something which he ought to take into account; or (2) as in ward v. James [1966] 1 Q.B. 273, in order to promote consistency in the exercise of their discretion by the judges as a whole where there appear, in closely comparable circumstances, to be two conflicting schools of judicial opinion as to the relative weight to be given to particular considerations."

42. I now turn to discuss the leading cases on the subject. As Lord Diplock pointed out in the course of his speech in Birkett v. James [1978] AC 297, at p.322, time which had elapsed before the issue of a writ inside the limitation period could not of itself constitute inordinate delay however much the defendant may already have been prejudiced by the lack of early notice of the claim against him, the fading recollections of his potential witnesses, their death or their untraceability. In his view to justify dismissal of an action for want of prosecution the delay relied upon had to relate to time which the plaintiff had allowed to lapse unnecessarily after the writ has been issued.

Lord Diplock added:

"A late start makes it the more incumbent upon the plaintiff to proceed with all due speed and a pace which might have been excusable if the action had been started sooner may be inexcusable in the light of the time that has already passed before the writ was issued."

Later at p.323, Lord Diplock had this to say (as we have seen, the earlier part of this passage was cited by the judge):

"To justify dismissal or an action for want of prosecution some prejudice to the defendant additional to that inevitably flowing from the plaintiff's tardiness in issuing his writ must be shown to have resulted from his subsequent delay (beyond the period allowed by rules of court) in proceeding promptly with the successive steps in the action. The additional prejudice need not be great compared with that which may have been already caused by the time elapsed before the writ was issued; but it must be more than minimal; and the delay in taking a step in the action if it is to qualify as inordinate as well as prejudicial must exceed the period allowed by rules of court for taking that step.

43. In his speech, Lord Salmon made these observations,at p.331:

"When a defendant is seriously prejudiced (as he often is) by a writ being issued long after the cause of action has accrued, before the action can be dismissed for want of prosecution (a) the delay subsequent to the issue of the writ must fail to comply with the time-table laid down in the rules: (b) it must be inordinate and inexcusable; (c) in deciding whether it is, the delay prior to the issue of the writ should be taken into consideration; and (d) the delay after the issue of the writ must increase the prejudice already suffered by the defendant in that he must be worse off than he would have been but for that delay."

44. These propositions, are echoed and affirmed by Lord Griffiths in the leading speech in Dept. of Transport v. Chris. Smaller Ltd. [1989] 1 AC, at 1207-1208:

"The principles in Allen v. McAlpine and Birkett v. James are now well understood and I have not been persuaded that a case has been made out to abandon the need to show that the post writ delay will either make a fair trial impossible or prejudice the defendant. Furthermore, it should not be forgotten that long delay before issue of the writ will have the effect of any post writ delay being looked at critically by the court and more readily being regarded as inordinate and inexcusable than would be the case if the action had been commenced soon after the accrual of the cause of action. And that if the defendant has suffered prejudice as a result of such delay before issue of the writ he will only have to show something more than minimal additional prejudice as a result of the post writ delay to justify striking out the action."

45. Later, at p.1208, Lord Griffiths rejected another argument advanced on behalf of the defendant, that the burden should be on a plaintiff guilty of inordinate post writ delay to prove that the defendant will not suffer prejudice as a result of the delay.He said:

"I regard this as a wholly impractical suggestion. It would put an unrealistic burden on the plaintiff. The plaintiff will not know the defendant's difficulties in meeting the case, such as the availability of witnesses and documents nor will the plaintiff know of other collateral matters that may have prejudiced the defendant such as the effect of delay on the defendant's business activities. The defendant, on the other hand, has no difficulty in explaining his position to the court and establishing prejudice if he has in fact suffered it."

46. In considering the proper approach of a court to the issues arising in this case, I have found the unreported decision of Clough, J. (as he then was) in Gobind Mohan and Another v. Hutchison International Ltd., HCA No. 1647 of 1981 (21st February 1984) of great assistance. There he reviewed all the relevant leading cases which had been decided in England and in Hong Kong at the time he delivered his judgment and he summarised the law where both pre-writ and post-writ delay had been relied upon in an application of the kind before us, as follows (pp.28-29):

47. I gratefully adopt this analysis, as well as the questions Clough, J. formulated at p.29. I adapt his formulation to the case before us:

48. No case that has been decided since the Mohan case has made it necessary to re-consider what Clough, J. had to say. Indeed, in the recent case of Hayes v. Bowman [1989] 1 WLR 456, Slade, L.J. approached the matter in much same way. He said this at pp.466H to 467B:

"Mr. Ashworth relied on this passage [the passage from Lord Diplock's speech at p.323 which I have set out above] in support of a submission that all he had to show was 'more than minimal' additional prejudice to the defendant resulting 'from the post-writ delay, beyond that already caused by the delay of two and a half years in issuing the writ. We must not read Lord Diplock's speech as if it were a statute. Nevertheless, I have little doubt that Mr. McClaren was right in submitting on behalf of the plaintiff that the sense of Lord Diplock's statement of the relevant principles is that a defendant seeking the dismissal of an action for want of prosecution on the ground of delay must show overall serious prejudice plus more than minimal additional prejudice resulting from the post-writ delay. This is the basis upon which I proceed in this judgment."

49. As I have mentioned, on the first day of the appeal, Mr. Sarony accepted that the Company had been served with the writ on 17th October 1985. About this, in his judgment, the judge said that on that date "technical service was effected at the registered office of the second defendant, although it was apparent that the Company was no longer carrying on business and it was unlikely that the writ would come to the attention of any responsible officer of the second defendant".

50. As was to be expected in the light of Mr. Sarony's concession, no point was raised in the grounds of appeal that service had not in law been effected on17th October 1985. It came as some surprise, therefore, that at the resumed hearing of the appeal, when his turn came to reply to the submissions of Mr. Mills-Owens for Mr. Shum, Mr. Sarony sought to withdraw his concession and to submit that the Company had not been properly served in accordance with the RSC.

51. Mr. Sarony's submission, he told us, would have been based on an alleged failure to comply with 0.10 which provides that one of the ways in which a writ may be served (if is not served personally) is by inserting a copy of the writ enclosed in a sealed envelope through a letter box for the address of the defendant (0.10, r.1(2) (b)) and that where the writ is served in that way the affidavit proving due service of the writ must contain a statement to the effect that in the opinion of the deponent the copy of the writ will have come to the knowledge of the defendant within 7 days after it had been inserted through the letter box (0.10, r.1(3) (b) (i).

52. I would only say that had we allowed the concession to be withdrawn to permit the new stand to be taken, the submission would have ignored the provisions of 0.10, r.1(7) whim state that r.1 "shall have effect subject to the provisions of any ordinance ... and in particular to any enactment which provides for the manner in which documents may be served on bodies corporate." In so far as companies, are concerned, there is just such an enactment. Section 356 of the Companies ordinance provides that "A document may be served on a company by leaving it at or sending it by post to the registered office of the company."

53. This is what Mr. Hau Ping, a Legal Aid Assistant, said in his affirmation of 1st April 1987:

54. There can be no doubt that service of the writ was effected on the Company in accordance with s.356 which contains no requirement of the kind to be found in 0.10, r.1(3)(b)(i). Thus even if we had allowed Mr. Sarony to resile from his earlier concession and to make an appropriate amendment to the Company's grounds of appeal, which we were not inclined to do, the indulgence he would have been granted would have been to no avail.

55. The question of the regularity of the service is important because, in my view, the Company while it remained on the Register of Companies (which it still does we were told) and maintained its Hopewell Centre registered office, cannot seek to derive any benefit from the fact that due to their own inadequate administrative arrangements they did not in fact learn of the writ until March 1987.

56. In this context, I think that it is necessary firmly to bear in mind that whatever rights the Company's insurers might have in relation to the conduct of the defence to this action, they cannot be in a position better than the Company itself. If the Company found themselves in difficulties wholly brought about by the improvident management of their affairs by their officers or staff, blame for any consequential problems faced by the insurers cannot be laid at the plaintiff's door.

57. The Company sought to establish before the judge that they had suffered financial prejudice as a result of the plaintiff's dilatory prosecution of his claim. The point is made in this way, in Mr. Skrbic's affidavit of 1st November 1989:

"17. Furthermore, the 2nd Defendants have suffered substantial financial prejudice by reason of the foregoing delay in respect of the potential award in general damages for pain, suffering and loss of amenity. Had the claim been prosecuted timeously, it is reasonable to suppose that it would have been tried or settled by approximately 1986 instead of 1990. Assuming for the purposes of quantifying the potential prejudice suffered by the 2nd Defendants that the Plaintiff's injuries came at the top end of the 'serious' and bottom end of the 'substantial' categories postulated in the case of Li Ting Lam [1980] HKLR 657 and making provision for annual increments at the rate of 10% for inflation, the award would have been in the order of HK$128,000. Following revision of the quantum of damages in this category as set out in Lau Che Ping [1988] HKLR 650, the award made in 1990 would be of the order of HK$216,000."

58. For the proposition advanced, Mr. Sarony relied, both in the court below and before us, on Hayes v. Bowman. The judge's comment on the issue in his judgment was brief:

"AS to the allegation that there is financial prejudice arising from a possible increase in damages awarded, I am confident that, if the point is a good one, the trial judge will be able to cope with this when assessing his award."

59. The Company complains that this approach was wrong and that they had shown financial prejudice exceeding the ordinary inflationary effect upon awards of damages, which the judge ought to have taken into account

60. Before addressing these submissions, I remind myself of the remarks of Lord Griffiths in Dept. of Transport v. Chris. Smaller Ltd. at p.1209E:

"These authorities clearly establish that prejudice may be of varying kinds and it is not confined to prejudice affecting the conduct of the trial. It would be foolish to attempt to define or categorise the type of prejudice justifying striking out an action

61. And in Hayes v. Bowman itself, at p.463C, Croom-Johnson, L.J. emphasises that in Birkett v. James, when Lord Diplock spoke of delay likely to cause, or to have caused, serious prejudice to the defendant "[he gave] no hint as to what is meant by prejudice".

62. There was no evidence before the judge, or before this court, on the issue of the financial prejudice asserted, other than the passage from Mr. Skrbic's affidavit I have just quoted. While it may well be open to a defendant to seek to establish so great a degree of financial prejudice (by being liable to pay a substantially larger sum by way of damages due to prolonged delay by the plaintiff in proceeding with his claim) as to justify striking out the action on this ground alone, or to permit this form of financial prejudice to be weighed in the scales as an additional factor when the judge is exercising his discretion, it seems to me that the Company simply did not produce sufficient evidence before the judge to require or permit him to take the alleged financial prejudice into account. I do not find it necessary to go further into the matter. I merely comment that the submissions made to us by Mr. Mills-Owens on the figures mentioned in Mr. Skrbic's affidavit, at the very least, cast serious doubts upon the soundness of his hypothetical calculations. A party who wishes to advance an argument based on this type of financial prejudice in support of an application to strike out would do well carefully to examine the guidance given by Slade, L.J. in Hayes v. Bowman on the nature of the evidence a court is likely to expect.

63. Mr. Sarony submitted, on the authority of Revici v. Prentice Hall Inc. [1969] 1 WLR 157, that the judge had erred in failing to strike out the. claim, once he had found that there had been inordinate delay for which no excuse had been offered. I mean no disrespect to Mr. Sarony when I content myself by saying that in my judgment, that case lends no support for the proposition advanced.

64. Another ground of appeal was that the judge had applied the wrong test in considering the post-writ delay by applying the test laid down by Lord Diplock in Birkett v. James rather than the correct test adumbrated by Lord Griffiths in Dept. of Transport v. Chris. Smaller Ltd. which only required the Company to show something more than minimal additional prejudice to justify striking out the action. During the hearing, Mr. Sarony conceded that this ground was misconceived and abandoned it.

65. It will be recalled that the judge held that there had been "extraordinary" delay on the part of the plaintiff since "early 1986" and that "no serious attempt [had been] made ... to excuse the delay". However, he held that this subsequent delay could not be said to have resulted in any additional prejudice because by the time the period of significant subsequent delay began to run "[the Company] and its records had effectively disappeared from the scene."

66. In the light of the concession made by Mr. Sarony (that if the judge was right in holding, in effect, that the period of inexcusable delay on the part of the Company did not begin until after early 1986, the Company had no case) it is crucial to decide whether the plaintiff can be penalised for the delay (permitted by 0.6, r.8) that occurred between the issue of the writ (15th April 1985) and its service on the Company (17th October 1985).

67. Mr. Sarony submits that this period should be taken into account in addition to the subsequent inexcusable and inordinate post-writ delay relied upon by the Company to establish additional post-writ prejudice. I understand this submission to be based upon the propositions that (i) the writ was issued so close to the expiration of the limitation period and (ii) the House of Lords in Birkett v. James regarded all delay subsequent to the issue of the writ as post-writ delay which could be relied upon by a defendant to establish additional, more than de minimis, prejudice. In my judgment, authority is against him. It seems to me quite clear from the passage of Lord Diplock's speech in Birkett v. James (at p.323F-H) which I have cited above, that utilising periods allowed by the rules of court cannot be prayed in aid as culpable delay in a striking out application. This appears, too, from Lord Salmon's speech, at p.331B-C, also cited above. I think that Lord Griffiths was tacitly recognising the impact of both limitation statutes and rules of court on the exercise of the court's discretion in these matters in Dept. of Transport v. Chris. Smaller Ltd., when he said, at p.1206:

"This case is due to be tried in November 1989, that is, 11 years after the accident. This is a totally unnecessary delay but it is principally due to the fact that the plaintiffs did not commence the action for5 1/2 years and then did not serve the writ until nine months later. Under the present law of limitation, the plaintiffs were allowed six years in which to commence their action and, under the present rules of practice, were allowed a further 12 months in which to serve the writ."

68. This dicta fortifies my view that delay cannot, at one and the same time, be permitted by the rules and be inexcusable.

69. As regards the effect of the release letter on the mind of the Company, I am not prepared to hold that the view the judge took of the matter was wrong. I think, too, that Mr. Mills-Owens was justified in relying on the point that no officer or representative of the Company has deposed that they had relied on the letter, apparently to do nothing about preparing themselves for a possible claim in damages by the plaintiff for his very serious injuries.

70. I was not persuaded that the judge had wrongly exercised his discretion by allowing the action to proceed, despite the undoubted delays that had occurred. It seemed to me, with respect, that his decision to deal with the matter by making a peremptory order which had to be complied with by the plaintiff within six days, and by depriving him of the costs to which he would ordinarily have been entitled, was perfectly sensible and a proper exercise of discretion with which this court was not entitled to interfere. He did not misapply the law, and the conclusions he reached on the facts upon which his judgment was founded were open to him on the material before the court. It was for these reasons that I agreed with my Lords that the appeal should be dismissed.

Clough, J.A.:

71. I agree with the reasons given in the judgment of my Lord Fuad, which I have had the advantage of reading in draft, for dismissing this appeal.

Macdougall, J.A.:

72. I also agree.

Representation:

Mr. Neville Sarony (Wilkinson & Grist) for the Appellant/2nd Defendant

Mr. Richard Mills-Owens, Q.C., Mr. Aarif Barma and Mr. Jat Sew Tong (Director of Legal Aid) for the Respondent/Plaintiff