Wong Wai Kuen v. Chu's Magic Co. Ltd.

DCCJ019263/1993

DCCJ19263/1993

IN THE DISTRICT COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

CIVIL ACTION NO. 19263 OF 1993

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Coram: H.H. Judge Li in Chambers

Date of Hearing: 25 May 2001

Date of Handing Down Judgment: 4 June 2001

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Judgment

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For reasons that will become apparent, the story of this case should be told using the parties' own words:-

(1) letter dated 1 July 1991

「July 1, 1991

Ms. Wong Wai Kuen, Lorsa
Executive Administrator

Dear Ms. Wong,

Re : Employment Confirmation

It is our pleasure to confirm that you have successfully completed your probation period with Chu's Magic Co., Ltd.

Effective July 1, 1991, your salary will be revised from HK$8,500 to HK$12,000 per month and will be granted a year and double pay and a proportional commission.

We anticipate a long and happy association with you and appreciate your continued contribution to the Company your high working performance.

Yours faithfully,
CHU'S MAGIC CO., LTD.

For and on behalf of
CHU'S MAGIC CO., LTD.
朱氏魔術有限公司
(Signed)
..................................
Authorized Signature(s)
Peter Chu
President」

(2) letter dated 5 October 1991

「October 5, 1991

Ms. Wong Wai Kuen, Lorsa
Executive Administrator

Dear Ms. Wong,

Further to our letter to you dated July 1, 1991 regarding your terms and conditions of your employment with Chu's Magic Co., Ltd., we would like to confirm you that

(a) You will be granted a year and 2 months salary which is payable at the end of each year or at the termination of your service with CHU'S calculated at a prorata rate.

(b) In addition to the above 2 months salary, you will also be granted a HK$43,333.00 commission which is payable at the end of this year or at the termination of your service with CHU'S and calculated at a pro-rata rate.

Thank you for your contribution in the past months.

Yours faithfully,

(Signed)
Peter Chu
President」

(3) letter dated 12 June 1992

「June 12, 1992

Ms. Wong Wai Kuen, Lorsa
Executive Administrator

Dear Ms. Wong,

Re: Yearly Sales Commission

I am delighted to inform you that Chu's Magic Co., Ltd. has decided to commission you 3% on the yearly total sales figures calculated on the first day of January of the year till the last day of December of the same year, as a year end bonus for your contribution to the company.

This bonus is paid subject to the condition that the above yearly total sales figures reaches $4,010,000.00, and is payable at the end of January of the following year or at the termination of year service with Chu's Magic Co., Ltd. calculated at pro-rata.

You may divide the said bonus to your team staff accordingly.

Yours faithfully,
CHU'S MAGIC CO., LTD.

For and on behalf of
CHU'S MAGIC CO., LTD.
朱氏魔術有限公司
(Signed)
..................................
Authorized Signature(s)
Peter Chu
President」

(4) Memo dated 12 June 1992

「To: Lorsa Wong / Elizabeth Everitt
Subject: Peter Chu
Date: June 12, 1992
Subject: Sales Commission

Our company has decided that for any sales handled by the Chu's Magic (Canada) Ltd. and the productions of the products of the above sales being handled by the Chu's Magic Co., Ltd., the first year sales figures will be divided in the following proportional.

Chu's Magic (Canada) Ltd. - 50%

Chu's Magic Co., Ltd. - 50%

Regards
For and on behalf of
CHU'S MAGIC CO., LTD.
朱氏魔術有限公司
(Signed)
..................................
Authorized Signature(s)
Peter Chu
President」

(5) letter dated 18th June 1992

「June 18th, 1992

Ms. Wong Wai Kuen, Lorsa
Executive Administrator

Dear Ms. Wong,

Re: Yearly Sales Commission

I am writing to you to revise the letter on the June 12th, 1992. Due to company policy no commission and bonus will be paid by the pro-rata basis. Commission and bonus will be paid to you on site staff out the end of year 1992.

Double pay and salary will be pay by pro-rata. Basis all terms remain unchanged.

Yours faithfully,
(Signed)
Peter Chu
President」

(6) letter dated 19 September 1992

「September 19, 1992

Chu's Magic Co., Ltd.

Dear Mr. Chu,

I regret to inform you that I will resign from the post of Executive Administrator effective from October 18, 1992.

Thank you for your attention.

Yours faithfully,

(Signed)
Lorsa Wong」

(7) letter dated 19 October 1992

「October 19, 1992

TO WHOM IT MAY CONCERN

This is to certified that Ms. Lorsa Wong Kuen (      ) was under our employment as Executive Administrator from May 24, 1991 to October 18, 1992.

During her service, Ms. Wong has proven herself to be honest, competent and industrious. She had independently handle assignments given by the company and had performed to our entire expectation and satisfaction.

Ms. Wong left on her own accord and we have no reservation in recommending her to any future employers. We wish her very success in the future career.

CHU'S MAGIC CO., LTD.

For and on behalf of
CHU'S MAGIC CO., LTD.
朱氏魔術有限公司
(Signed)
..................................
Authorized Signature(s)
_______________________
Peter Chu
President」

2.Soon after leaving the Defendant's employ, the Plaintiff filed a claim with the Labour Tribunal. The Tribunal held a trial and heard some of the evidence. But that was only the beginning of the long career of this case. According to the chronology prepared on behalf of the Defendant and agreed to by the Plaintiff, the following events took place:-

Date	Event
18.10.1998	Labour Tribunal transferred the case to the District Court.
22.12.1993	Her Honour Judge CB Chan's order - Direction given for the conduct of the trial in the District Court. - 14 days for Statement of Claim; 14 days for Defence thereafter; 14 days for Rely, if any, thereafter.
23.12.1993	Plaintiff applied for Legal Aid (automatic stay for 42 days)
31.01.1994	Legal Aid Certificate granted to Plaintiff
22.02.1994	The parties agreed to an extension of 7 days for the Plaintiff to file Statement of Claim.
29.04.1994	Defence and Counterclaim filed
14.05.1994	Reply and Defence to Counterclaim filed
24.0.5.1994	Notice of Fixing Date issued
18.05.1994	Plaintiff's solicitors filed an application to fix a date for trial.
06.06.1994	His Honour Judge Gould's order - Call-over hearing when the Court made an order for mutual discovery (14 days) and exchange of witness statements (42 days)
22.06.1994	Plaintiff's List of Documents
31.08.1994	Defendant's List of Documents
22.02.1996	Her Honour Judge CB Chan adjourned the summons for specific discovery to a date to be fixed for argument.
18.04.1996	Service of Chu's 3rd Affirmation on Plaintiff's solicitors
10.09.1996	Plaintiff's solicitors requested documents mentioned in Schedules A & B of Chu's 3rd Affirmation
24.11.1999	Notice of Fixing Date issued by the District Court returnable on 06.12.1999
06.12.1999	Deputy Judge Lok adjourned the call-over hearing to 13.09.1996 with costs to the Defendant.
07.12.1999	Notice of Fixing Date issued returnable on 13.09.1999
09.12.1999	Plaintiff's solicitors filed notice of intention to proceed
13.12.1999	Call-over hearing when the Court ordered that signed witness statements be exchanged between the parties within 42 days.
28.11.2000	Plaintiff's solicitors filed supplemental list of documents and hearsay notice
29.11.2000	Defendant's solicitors asked for an inspection of the documents mentioned in Defendant's solicitors' office on 02.02.2000
29.11.2000	Defendant's solicitors wrote to suggest inspection be carried out on 06.12.2000
04.12.2000	Plaintiff's solicitors asked for exchange of parties' witness statements on 09.09.2000
08.12.2000	Defendant's solicitors said their client is out of town and shall revert to Plaintiff's solicitors in due course concerning the exchange of witness statements.
12.12.2000	Defendant's solicitors asked for inspection of documents in Plaintiff's List of Documents and Supplemental List of Documents on 15.12.2000
13.12.2000	Plaintiff's solicitors said an inspection be carried out on the same day, i.e. 13.12.2000
19.12.2000	Plaintiff's solicitors filed counter notice
28.2.2001	Plaintiff's solicitors summons to dismiss action for want of prosecution

3.The substance of the Plaintiff is very simple:-

"Particulars of Claim

8. Pursuant to the partly oral and partly written agreement as referred to in paragraphs 3, 4 and 5 above, the Plaintiff is entitled to commission for the year 1992 on a pro rata basis calculated as follows:

0.03	x 4,274,683.00	x 292/365
(3% commission)	(aggregate total gross value of sales invoiced during 1992)	(Proportion of year under the Defendant's employment)

= HK$102,592.39
= (Amount of commission due)

13. Wrongfully and in breach of the express terms of the agreement as pleaded in paragraph 10 above, and despite the Plaintiff's repeated demands and requests, the Defendant has failed and/or refused to pay the Plaintiff [pro-rata year end bonus] the amount of HK$12,075.00 or any part thereof being the sum due thereunder.

14. The Plaintiff also claims against the Defendant interest on the said sums of HK$102,592.39 and HK$12,075.00 from the date of Writ to the date of Judgment at the rate of 9.5% per annum pursuant to Section 49 of the District Court Ordinance Cap. 336 or at such other rate as this Honourable Court may deem fit and thereafter at judgment rate until payment by virtue of Section 50 of the District Court Ordinance Cap. 336."

4.The Defence filed avers that:-

"3.......... In or about December 1991 or January 1992, the parties agreed, inter alia, that a 3% commission would be payable the Plaintiff for the 1992 calendar year on the total gross sales invoiced by the Defendant to customers from its local and overseas markets on condition that the total gross sales invoiced reached HK$4,100,000.00 or above between the period of 1st January 1992 to 31st December 1992 and the Plaintiff continued to be in employment with the Defendant for the entire commission period. The 3% commission was to be shared between the Plaintiff and her assistants. It is specifically denied that commission was to be paid on a pro-rata basis in the event the Plaintiff terminated her employment with the Defendant before the end of the calendar year. The Defendant further avers that the Canadian market was not a separate market from its overseas market as pleaded therein in the Particulars of Claim.

4.......... The Defendant further avers that the letters dated 5.10.91 and 12.6.92 were written by the Plaintiff and who interpreted them in the briefest manner without explaining the full meaning and effect of the letters and the word 'pro-rata'. Mr. Chu of the Defendant signed the said letters on being mislead as to its true purport and effect. While in Canada, Mr Chu of the Defendant was explained the letter dated 12.6.1992 and realising that it was not the terms agreed, the Defendant immediately wrote to the Plaintiff on 18th June 1992 advising that the 3% commission was not payable on a pro-rata basis but to those staff in employment with the Defendant at the end of the 1992 calendar year. One month's double pay and salary were to be calculated on a pro-rata basis should the Plaintiff leave her employment before completing one year's service with the Defendant."

5.It has been seen from the pleadings that the issue between the parties is what was promised by the Defendant by way of commission and year end bonus. Much depends on the construction of the letters and memorandum written by the Defendant to the Plaintiff in 1991 and 1992 and the circumstances under which those documents came into being. As I see it, the case at least in part turns on credibility. As to quantum and figures, the Plaintiff quite clearly was in 1993 already in possession of sufficient materials to plead precise amounts. The case cannot have been simpler! Yet it has been floating in the court system for over 7 years, longer than the limitation period for a contractual claim!

The Defendant's case for want of prosecution

6.For brevity, I have omitted to list the events that occurred between 31 August 1994 and 22 February 1996. In fact, the parties, during that period, busied themselves with specific discovery and further and better particulars. Hence there is no complaint of time wasted during that period. However, thereafter there were 3 significant periods of inactivity:- (1) 18 April 1996 to 10 September 1996, (2) 10 September 1996 to 24 November 1999 and (3) 13 December 1999 to 28 November 2000. Altogether, for over 4 years, the case was laid dormant by the Plaintiff. The Defendant contends that there was inordinate delay.

7.According to Mr. Ho, counsel for the Defendant, the delays were inexcusable because:-

For the first period of delay (5 months)

There is no real excuse offered by the Plaintiff.

For the second period of delay

i. 1 year 1 month's delay (From 16.10.1996 to 03.12.1997)

Although the Plaintiff's expert (accountant)'s report was ready by 16.10.1996, the Plaintiff's solicitors only wrote to the Director of Legal Aid ("DLA") to request for assignment of counsel to advise on liability, quantum and merits on 03.12.1997, which is more than one year later. What did the Plaintiff do during this period? Nothing on the record. There was a total inaction on the part of the Plaintiff and her solicitors.

ii. 4 months (approx.) (From 03.12.1997 to 30.3.1998)

It took the Plaintiff's solicitors another 4 months to prepare instructions to counsel. Why it took so long? No explanation was given.

iii. 7 months' delay (From 14.07.1998 to 15.02.1999)

Notwithstanding the fact that Plaintiff's former counsel on 17.07.1998 wrote to the Plaintiff's solicitors saying that her advice would be ready shortly, she could not deliver. She took leave for maternity leave. Finally, DLA had to assign another counsel on 15.02.1999 to take up the case. It is said that 7 months' time was completely wasted because the fact that the Plaintiff's former counsel quitted for maternity leave is not an excuse at all. Since the Plaintiff's former counsel knew well in advance that she would not be in a position to handle the case, she should have informed the Plaintiff's solicitors accordingly. She should not have sat on the file and did nothing.

iv. More than 2 months' delay (17.03.1999 to 11.06.1999)

On 17.03.1999, the Plaintiff's solicitors sent instructions to new counsel. For no reason given, counsel only arranged to have conference with the Plaintiff more than 2 months later. During this period, the Plaintiff's solicitors chased up counsel 3 times for his advice.

v. 4.5 months' delay (From 23.06.1999 to 17.11.1999)

Notwithstanding that counsel's advice was ready on 23.06.1999, the Plaintiff's solicitors delayed about 4.5 months before applying to restore the case. The Plaintiff tried to give an excuse that during this period her solicitors needed to explain the operation of first charge of DLA and the approximate legal costs involved. For this purpose, although the DLA wrote to the Plaintiff's solicitors on 14.07.1999, the Plaintiff only came to the Plaintiff's solicitors' office 4 months later.

For the third period of delay (10 months)

In a nutshell, the Plaintiff's solicitors and counsel took more than 10 months to settle the Plaintiff's witness statement, the tardiness is totally unreasonable. The Plaintiff may argue that DLA assigned counsel to settle her witness statement on 22.03.2000. But, when Her Honour Judge CB Chan made the order on 13.12.1999 for the parties to exchange their witness statement, the Plaintiff's solicitors knew very well they only had 42 days to prepare the witness statement to exchange with the Defendant's solicitors. Further, it is also unreasonably long for counsel to take 4 months (from 26.06.2000 to 31.10.2000) to settle a witness statement, especially when his solicitors had already prepared the draft for him.

8.Mr. Ho suggested that both on the precise terms of employment promised by the Defendant and on credibility, Mr. Chu, the only and principal witness for the Defendant, is liable to be questioned and cross-examined at the trial at length on matters that took place more than 9 years ago. Common sense tells us that the longer the time lapsed after an event the more a witness' memory about such event fades. This is especially true in this case since there are few contemporaneous documents that can be relied upon.

The Plaintiff's case for continuance

9.In his skeleton argument, Mr. Wong, counsel for the Plaintiff, at first stated that there has been no delay at all in this case. But during the course of the hearing counsel fairly and properly accepted that there was delay but the delay was not inordinate.

10.As to the question of prejudice, Mr. Wong contended that, even if there was inordinate delay, the Defendant has not been prejudiced. The fear of lapse of memory is unfounded. Mr. Chu has made a witness statement to his solicitors in 1994. Moreover, he had given a witness statement to the Labour Tribunal in 1993. This case had already been heard once in the Labour Tribunal and there is a full set of Notes of Proceedings recording the evidence of both parties. It is therefore difficult to envisage what difficulty Mr. Chu will run into at the trial. If one looks at the content of the 2nd Affirmation of Mr. Chu, it seems that he has been able to remember his alleged case without any problem or difficulty. Moreover, as to the credibility of Mr. Chu, one has to weigh it cautiously. On the one hand, he complained of repeated misconduct on the part of the Plaintiff. However, on the other hand, he wrote her a very kind recommendation letter when she resigned praising her as a honest, competent and industries employee.

The Principles

11.The parties are in agreement as to the relevant principles to be applied. The basic principles for striking out are well settled and was laid down in Allen v McApline [1968] 2 QB 229. At p.268E to 269C, Salmon LJ said,

"...... In order for an application [i.e. an application for striking out for want of prosecution] to succeed, the defendant must show:

(1) that there has been inordinate delay. It would be highly undesirable and indeed impossible to attempt to lay down a tariff - so many years or more on one side of the line and a lesser period on the other. What is or is not inordinate delay must depend upon the facts of each particular case. These vary infinitely from case to case, but inordinate delay should not be too difficult to recognise when it occurs.

(2) that this inordinate delay is inexcusable. As a rule, until a credible excuse is made out, natural inference would be that it is inexcusable.

(3) that the defendant is likely to be seriously prejudiced by the delay. This may be prejudice at the trial of the issue between themselves and the plaintiff, or between each other, or between themselves and the third parties. In addition to any inference that may properly be drawn from the delay itself, prejudice can sometimes be directly proved. As a rule, the longer the delay, the greater the likelihood of serious prejudice at the trial." (my emphasis added)

12.The House of Lords in Birkett v James [1978] AC 297 approved the above principles. Lord Diplock at p.318E to G said,

"Those principles are set out, in my view, accurately, in the note to RSC, Order 25 r.1 in the current Supreme Court Practice (1976). The power should be exercised only where the court is satisfied either (1) that the default has been intentional and contumelious ... or (2) (a) that there has been inordinate and inexcusable delay on the part of the plaintiff or his lawyers, and (b) 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 or is such as is likely to cause or o have caused serious prejudice to the defendants either as between themselves and the plaintiff or between each other or between them and a third party."

13.In Trill v Sacher [1993] 1 WLR 1379, Neil LJ at pp. 1398C - 1399F said,

"(3) Inordinate delay cannot be precisely defined. "What is or is not inordinate delay must depend upon the facts of each particular case." Allen v Sir McApline & Sons Ltd. [1968] 2 QB 229, 268F. It is clear, however, (a) that for delay to be inordinate it must exceed, and probably by a substantial margin, the times prescribed by the rules of court for the taking of steps in the action; ..." (Emphasis added)

"(11) Prejudice to the defendant may take different forms. In many cases the lapse of time will impair the memory of witnesses. In other cases witnesses may die or move away and become untraceable.

(12) The prejudicial effect of delay may depend in large measure on the nature of the issues in the case. Thus the evidence of an eyewitness or a witness who will testify to the words used when an oral representation was made is likely to be much more seriously impaired by the lapse of time than the evidence of someone who can rely on contemporaneous documents ..." (Emphasis added)

14.In Lee Pui Kuen v Asia Television Limited, CACV 135 of 2000, the Hong Kong Court of Appeal added that:-

"I only wish to confirm what has already been said in respect of the prejudice caused by the delay. The Judge found that the delay was inordinate and inexcusable. He went on to hold hat this would affect the possibility of there being a fair trial. In that clearly what the Judge had done was to consider the facts of the case and then apply common sense to the question of the difficulty of witnesses' memories and recollections. There are at least 2 aspects to the question of memory. The first is the question of the particular party being able to marshal its own evidence and the second is the ability of witnesses to deal with matters that will arise at trial in dealing with the other side's case and the cross-examination." Per Rogers JA at page 5 of judgment.

The Merits of this application

15.In the present case, the parties finished the discovery stage by April 1996. After that and until November 2000, the Plaintiff's solicitors in effect only produced 3 more documents - filing a supplemental list of documents and a hearsay notice and preparing a witness statement. They took a total of about 4 years and 5 months to do these 3 items of work. Obviously, such lengthy delay has substantially exceeded the usual times prescribed by the court and the rules of procedure. Should such length of delay be considered inordinate? In Lee Pui Kuen case, the action started its life as a claim in the Labour Tribunal in 1992. At the High Court, Deputy Judge Woolley found that there had been delay amounting in totality to more than 4 years which in his judgment was inordinate and could not be excused. In the present case, the delay is also more than 4 years. But this case is far much simpler than the Lee Pui Kuen case because there the dispute concerned the detailed running of a television station. I have no difficulty to all to find that there has been inordinate and inexcusable delay in this case before me.

16.As to prejudice, it is safe to say that the few documents relevant in this reveal a change of terms of employment. See letters dated 12 June 1992 and 18 June 1992 both written by Mr. Chu on behalf of the Defendant. These two letters do not, on the face of them, explain the cause of the charge. But only one or the other would really determine the benefits the Plaintiff was entitled to. It is to be expected that counsel for the Plaintiff will subject Mr. Chu to lengthy and rigorous cross-examination on many matters directly concerning the letters and indirectly affecting credibility. The same will be done to the Plaintiff by counsel for the Defendant. After a lapse of tem years, it is quite likely that memory of matters may well have faded or become unreliable even though witnesses may pretend to remember this or that. In the circumstances, I am satisfied that a fair trial in this case will be very difficult to obtain.

17.It is arguable that the Defendant contributed to the delay. For example, on 18 April 1996 solicitors for the Plaintiff asked solicitors for the Defendant to produce certain documents. Then there followed a period of two years during which the Plaintiff's side did very little for the record. Plaintiff could well be waiting for the documents requested. However, as observed by Rogers JA in Lee Pui Kuen case, a defendant is generally entitled to sit back and do nothing although dilatory tactics adopted by a defendant may well diminish the alleged prejudice to that defendant. I am not sure if the Defendant in this case indeed sat on the Plaintiff's request for documents for two years. But even if the Defendant did failed to respond promptly, this can be distinguished from deliberate obstruction. In any event, it was always open to the Plaintiff to come to court to compel the Defendant to act. Hence, I conclude that the Defendant has not materially contributed to the delay.

18.Although there is no clear authority on this point, I should think that the substantial merits of the action, so far as the court at this juncture can hazard a view, is also a relevant factor to be considered when the court is exercising a discretion to bar a claim. After all, the courts should do justice, not just follow procedure. In my view, the letter of 18 June 1992 indicates fairly clearly that the Defendant would not agree to pay pro-rata commission and bonus. The Defendant might have renegaded from its promise made earlier in the letter of 12 June 1992. Yet, it appears that the Plaintiff did not demur or protest upon receipt of the letter of 18 June 1992. The Plaintiff's Reply does not even deny that the Plaintiff had received the letter dated 18 June 1992 nor does the Reply mention anything said or done by the Plaintiff in response to that letter. Assuming that by the letter dated 18 June 1992 the Defendant unilaterally altered the terms of employment agreed as per the letter of 12 June, 1992, the Plaintiff could have complained of constructive dismissal. But the Plaintiff resigned months later. A trial judge would be entitled to find, and is likely to find, that the Plaintiff had accepted the terms stated in the letter of 18 June 1992 as binding on the parties. With such finding, the Plaintiff's claim in its entirety is doomed. I would put the Plaintiff's chances of success as below 50%.

19.Finally, another factor to be considered is whether the fault of delay lies on the Plaintiff herself or on those representing her. In some cases, if the fault lies on the lawyers, it may be unjust to dismiss the Plaintiff's action for want of prosecution. In the present case, it appears to me that the fault lies on those representing the Plaintiff. Nonetheless, as I have assessed that the Plaintiff's chances of success in the action on the merits are less than 50%, it is just as well that the action is dismissed now to save further costs.

Order

20.In the premises, the Plaintiff's action is dismissed for want of prosecution with costs of the action to the Defendant to be taxed if not agreed. The Plaintiff's own costs are to be taxed in accordance with legal aid regulations.

Representation:

Mr. Meyrick Wong instructed by M/S W.K. To & Co. assigned by D.L.A. for the Plaintiff.

Mr. Simon Ho instructed by M/S K.F. Wong & Co. for the Defendant.