Yip Sun Fat v. Paul Lee Engineering Co Ltd

HCA001730/1980

IN THE SUPREME COURT OF HONG FONG

HIGH COURT

BETWEEN

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Coram: Hon. Mr. Justice Macdougall

Date: 6 October 1982

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DECISION ON PRELIMINARY ISSUE

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1. The preliminary issue before me for trial is whether it would be equitable to allow this action which was commenced outside the limitation period to proceed.

2. It is plain from section 30 of the Limitation Ordinance that I must have regard to the degree to which the provisions of section 27 or section 28 of the Ordinance prejudice the plaintiff or any person whom he represents, and to the degree to which any decision of the court would prejudice the defendant or any person whom he represents.

3. Sub-section (3) of section 30 enjoins the court to have regard to all the circumstances of the case and in particular to a number of specific matters that are set forth in paragraphs (a) to (f) of the sub-section.

4. It is with all these factors in mind therefore that I approach a consideration of this issue.

5. The only evidence before me is that contained in one affidavit and two affirmations filed by the parties. The principal facts that emerge from these documents are as follows.

6. The plaintiff suffered severe injuries on 13 July 1973 during the course of his employment by the defendant when an electric lamp standard fell on his head. He was at that time one day short of his 19th birthday. He received legal advice from the Legal Aid Department and as a consequence of a claim for workmen's compensation was awarded a sum of $77,800 on the basis of 100% permanent disability due to traumatic quadraplegia. The claim was unopposed.

7. In September 1975 when he was paid this sum he was informed by the legal aid officer then handling his case that he could also make a claim for damages at common law but that since he had already received damages in the sum of $77,800 his assets exceeded the amount allowable for legal aid purposes and that accordingly if he wished to proceed by way of a common law action for damages he would have to proceed through a private firm of solicitors.

8. On seeking advice from friends the plaintiff was led to believe that employing a lawyer to conduct a common law action on his behalf could be very expensive and that even if he did ultimately succeed in his action much of the damages that might be awarded to him would be lost in legal fees. He was also apprehensive that due to the severity of his injuries and to the fact that it appeared that he would not be able to work for the remainder of his life it would be unwise to jeopardise any part of the award in pursuing further legal action. Accordingly at that time he decided against instituting a common law action against the defendant.

9. In November 1977 he applied to Legal Aid Department for assistance in making "a claim for a sum of money to cover constant care and attention". He was informed by another legal aid officer that the circumstances of his case would not justify such a claim.

10. However, in December 1977 he was advised by yet another legal aid officer to apply for legal aid to pursue a common law claim. This he did on 9 December 1977. At this time he was not given any reason to suppose that his application would be granted. Shortly after this another legal aid officer who ultimately handled the plaintiff's application mistakenly formed the view that any common law remedy that the plaintiff might otherwise have been able to pursue had become statute barred from 13th July 1976. This legal aid officer wrongly concluded that since the plaintiff had made a successful claim for workmens compensation and at all times had been a minor in the custody of his father, the time for making a common law claim would have commenced to run from the date of the accident. In actual fact the limitation period did not expire until 14th July 1978, that is three years after the plaintiff attained his majority.

11. When therefore the legal aid officer dealt with the plaintiff's file in March 1978 his mind was not directed-to the urgency of commencing the action before 14th July 1978 but to the question of whether legal aid should be granted to enable the plaintiff to seek the Court's discretion to allow him to pursue his remedy despite it being, as the legal aid officer mistakenly thought, statute barred.

12. Since it is not the practice of the Legal Aid Department to grant legal aid in damages cases unless there is a reasonable chance that any judgment that might be given in favour of an applicant will be satisfied at least to the extent that it would be worth the cost of pursuing the claim, and as the defendant company was in liquid-ation with little or no assets with which to satisfy a judgment given against it, the legal aid officer decided that before further consid-eration could be given to the question of whether the plaintiff should be given legal aid, he should ascertain whether there was a valid insurance policy in force at the time of the accident covering the defendant in respect of any damages that might be awarded to the plaintiff.

13. On 7th April 1978, the legal aid officer wrote to the insurance company (the insurers) that had been involved in the workmens compensation claim and whom he believed might also have extended cover under a separate policy of insurance to the defendants in respect of common law claims. He advised them that he was considering the merits of making a common law claim against the defendant and that he wished to know whether in that connexion they were the defendant's insurers at the relevant time.

14. As the insurers did not reply to this letter, a reminder was sent on 2nd May 1978. The insurers replied to the reminder letter on 9th May and requested the Legal Aid Department to send it a copy of its letter of 7th April. The copy letter was posted to the insurers on 18th May 1978.

15. In reply the insurers acknowledged receipt and informed the Legal Aid Department that it was referring the matter to its "control office for instructions" and that it would let the Legal Aid Department "have [its] advices in the nearest future".

16. On 21st July 1978, one week after the limitation period expired, the insurers solicitors wrote to the Legal Aid Department stating that their clients had instructed them to act on their behalf and that they were now perusing the correspondence and would be in further contact in due course.

17. Whether there was any further correspondence between the Legal Aid Department and the solicitors for the insurers is not clear. If there had been any such correspondence it appears that it cannot have been of any great significance for neither party has referred to it in the affidavit and affirmations now before me. Furthermore the defendant has made no specific complaint concerning the period of time that elapsed between the receipt by the Legal Aid Department of the letter from the solicitors for the insurer and 29th March 1980 when the plaintiff obtained the leave of the court under section 186 of the Companies Ordinance to issue a writ against the defendant. The writ was finally filed on 12th April 1980.

18. Apparently there was a considerable delay on the part of those representing the defendant in making enquiries from the Official Receiver as to whether there was information in the defendant's files in his possession as to the identity of such witnesses, if any, who might have been able to assist them in determining the plaintiff's claim, for it was not until 12th January 1981, some 8 months after the filing of the writ, that the solicitors for the insurer were notified by the Official Receiver that according to his records the site agent where the accident occurred was the only person who would be likely to be of any assistance.

19. On 16th February 1981 the site agent informed the defendant's solicitors that as the accident had occurred so many years ago he had no recollection of what had happened nor could he remember who the plaintiff was.

20. It seems to me from what the site agent told the defendant's solicitors that it is probable that he was unable to recall the incident not because he had forgotten about it but because he had never had any personal knowledge of it. He may, for example, not have been present at the site on the day when it occurred or if he had been there, he may not have been directly involved in the events and enquiries that ultimately followed.

21. However that may be, I consider that if on 16 February 1981 the site agent had been totally unable to recollect the incident it is hardly likely that he would have been able to remember it immediately prior to the expiration of the limitation period, five years after the incident occurred. Assuming that he had been able to give material evidence immediately prior to the expiration of the limitation period it seems to me that the passage of a further 17 months would be unlikely to result in a total loss of recollection of the accident. Had he originally known of the incident and could recall it immediately before the expiration of the limitation period it appears to me to be more likely that in February 1981 he would have told the defendant's solicitors that although he could recall its occurrence, his memory had faded with the passage of time and that he retained only a vague recollection of the details of what had happened. No doubt he would have then informed them of such matters as he was able to recollect. I also consider it worthy of emphasis that not only did the defendant's solicitors not obtain this information from the Official Receiver until some two years and nine months after the insurers had received a copy of the first letter from the Legal Aid Department informing them that it was considering the merits of making a common law claim against the defendant, but that apparently no attempt had been made to obtain this information until some months after the writ had been filed.

22. Mr. Eddis for the plaintiff argues that in all the circumstance of the case and in particular those referred to in section 30(3) of the Limitation Ordinance it would be equitable to allow the action to proceed having regard to the degree to which (a) the provisions of section 27 of the Ordinance prejudice the plaintiff and (b) any decision under section 30(1) that the provisions of section 27 shall not apply to this action would prejudice the defendant or any person whom he represents.

23. Mr. Wesley Wong for the defendant submits that the plaintiff has not shown that it would be equitable to allow the action to proceed.

24. I now turn to a consideration of each of the matters to which I am required by virtue of section 30(3) to have particular regard, and to the arguments advanced by Mr. Wong in relation to these matters.

(a) the length of, and the reasons for, the delay on the part of the plaintiff.

25. Mr. Wong submits that a delay of 21 months beyond the period of limitation is inordinate and inexcusable. He says the blame for the delay rests both on the plaintiff who failed to take action through a private solicitor after he had been notified by a legal aid officer that he could pursue a common law action against the defendant, and on the legal aid officer who, after the plaintiff had been advised to lodge an application for legal aid in December 1977, informed him that the limitation period for commencing a common law action had expired.

26. In the light of the circumstances in which the plaintiff found himself in 1975 I do not consider that his failure to initiate an action through a private solicitor was unreasonable. However, even if his conduct at that time had been unreasonable it does not seem to me to be a matter of any great relevance because in December 1977 at a time when he was still within the limitation period and when he was first advised that he should apply for legal aid in respect of instituting a common law action, he immediately made such an application. It is therefore due to no fault of his that the action was not commenced within time.

27. In my view the initial reason for the delay in bringing the action to which culpability can be ascribed to anyone was undoubtedly that the legal aid officer who undertook the conduct of the plaintiff's case after he had made the application for legal aid in December 1977, held a mistaken view as to the time when the period of limitation had commenced to run. Even if that officer had not entertained an erroneous view of the law there can be no doubt that in accordance with the policy of the Legal Aid Department in civil cases he would still have set in train enquiries with a view to ascertaining whether any judgment that the plaintiff might succeed in obtaining would be fruitful. To this end he would have made the same enquiries of the insurers that he did in fact make.

28. Had the legal aid officer been aware that the limitation period had not expired it would have been open to him in view of the insurer's failure to respond to his request for the required information to keep the plaintiff's claim alive by issuing a writ prior to the expiration of the limitation period.

(b) the extent to which, having regard to the delay, evidence adduced or likely to be adduced by the plaintiff on the defendant is or is likely to be less cogent than if the action had been brought within the time allowed by section 27.

29. The only argument that has been advanced by the defendant under this heading is that since the particulars of negligence stated in the writ assert that the plaintiff will rely, inter alia on the doctrine of res ipsa loquitur, the longer the lapse of time from the date on which the cause of action arose and the filing of the writ, the more likely it must be that the defendant will be prejudiced, since the difficulty in marshalling evidence to meet this allegation greatly increases with the passage of time.

30. It is true that Mr. Eddis laid particular emphasis on the res ipsa loquitur aspect of the particulars of negligence but as I understand his argument he did so in order to seek to demonstrate that the period of time that elapsed between the date when the cause of action arose and the date of the issue of the writ was not a factor of any great significance since it was inherently unlikely in the circumstances in which the accident occurred that the defendant would have any answer to the allegation of res ipsa loquitur. In placing emphasis on this so called doctrine he did not abandon the other particulars of negligence set out in the statement of claim.

31. Whatever may be the merits of the arguments of both counsel in this regard it seems to me that in order to determine whether the evidence that might be adduced by the parties is likely to be less cogent now than if the action had been brought within the time allowed by section 27, it is of primary importance that I examine both the situation that obtained prior to the expiration of the limitation period and that which existed at the date of the issue of the writ.

32. Since the plaintiff's case is likely to depend on his own evidence it seems improbable that it's cogency will be adversely affected by the passage of time. Indeed there is nothing in the affidavit or affirmations to suggest that this would be so.

33. What then is the situation as to the evidence to be adduced or likely to be adduced by the defendant? Mr. Wong argues that the delay occasioned by the issue of the writ outside the period of limitation has resulted in grave prejudice to the defendant for the reason that it is now unable to ascertain either the identity of such witnesses to the accident as there might have been or the identity of other persons who may be able to throw light onto the matter. The only person whom enquiries have revealed might be able to assist the defendant is the site agent and he has no recollection of the accident or of the identity of the plaintiff. I have already expressed my view that it is improbable that he would have been able to give useful evidence prior to the expiration of the limitation period.

34. The insurers are the same as those who gave insurance cover to the defendant in respect of claims for workmens compensation. I find it difficult to imagine that any prudent insurer who pays out on a workmens compensation claim would not be alert to the possibility that he might also have given cover to the same employee in respect of common law actions for damages, particularly when that employer happens to be an engineering company such as the defendant.

35. Mr. Wong argues that the insurer in determining the merits of a claim in respect of workmens compensation would confine itself to a consideration of whether the injured person was a workman employed by the insured and whether he had been injured in the course of that employment. That may well be so, but I consider that it is most unlikely that in turning its attention to a determination of the claim it would so compartmentalise its mind that the real possibility of a common law claim arising out of the same accident would not occur to it. It seems to me that any sensible insurer in such a situation would at the very least be likely to ascertain the identity of such witnesses to the incident as there might have been.

36. The defendant company was wound up on 3rd February 1975 in pursuance of a petition presented on 6th November 1974, some fifteen months after the cause of action arose. The records of the defendant company would then have been placed in the hands of the Official Receiver. Furthermore it is reasonable to assume that since the company had been wound up its directors and managerial staff ' would have turned their minds to other matters and have given little or no further thought to events which had occurred in the company's past such as those which concern this action.

37. I therefore find it difficult to imagine, insofar as the marshalling of evidence is concerned, that the defendant was in a more adverse position at the time of the issue of the writ than it was immediately prior to its liquidation. As I have already observed it seems logical to assume that any records that it possessed at that earlier date would have been turned over to the Official Receiver and that any information in those records as to potential material witnesses to the accident would have been available at the date of the issue of the writ. It is even more likely that such information, if it had ever existed, was available at the time when the Legal Aid Department made enquiries of the insurers prior to the expiration of the limitation period.

(c) the conduct of the defendant after the cause of action arose, including the extent, if any, to which he responded to requests reasonably made by the plaintiff for information or inspection for the purpose of ascertaining facts which were or might be relevant to the plaintiff's cause of action against the defendant.

38. Mr. Wong contends that the "facts" referred to in this paragraph of section 30(3) can only refer to evidence relating to the accident, and that therefore the request by the plaintiff for information for the purpose of ascertaining whether the insurers were the insurers of the defendant in respect of the accident, is not relevant for the purpose of ascertaining facts which were or might be relevant to the plaintiff's cause of action against the defendant.

39. I see no reason for adopting such a restrictive interpretation of the words of paragraph (c). Indeed I am satisfied that they are sufficiently wide to embrace the type of information sought by the plaintiff from the defendant's insurers before the expiration of the limitation period.

40. It is plain also that such enquiries are not confined to those that may be directed to the defendant personally.

41. Lord Diplock when referring to the corresponding English legislation in Thompson v. Brown [1981] 1 WLR 744 observed at page 751H -

"The reference in paragraph (c) requires the Court to take into account the defendant's conduct ever since the action arose - not, be it noted, from what in the absence of knowledge by the plaintiff of material facts may be the later date when the primary limitation period started to run. The reference in this paragraph to respond to reasonable requests of the plaintiff for information recognises an obligation on a potential defendant not to be obstructive in enabling a potential plaintiff to obtain relevant information, though not imposing any obligation to volunteer such information; but in this paragraph the conduct of the defendant must, I think, be understood as including the conduct of his solicitors and his insurers by whom in the ordinary course of things, any requests for information will be dealt."

42. In this connexion I have already adverted to the failure of the insurers to respond with reasonable promptitude to the enquiries made by the Legal Aid Department in 1977 prior to the expiration of the limitation period. The letter from the solicitors for the insurers to the Legal Aid Department of 21st July 1978 suggests that even at that date the insurers had not supplied the information sought. Certainly no correspondence was exhibited to the affidavit or either affirmation to indicate that such information had been supplied, nor indeed was there any reference in the evidence to any such correspondence or to the giving of the requisite information.

(d) the duration of any disability of the plaintiff arising after the date of the accrual of the cause of this action.

43. Both Counsel agree that on the facts of this case this paragraph is not relevant.

(e) the extent to which the plaintiff acted promptly and reasonably once he knew whether or not the act or omission of the defendant, to which the injury was attributable, might be capable at that time of giving rise to an action for damages.

44. As I have already indicated I am satisfied that in all the circumstances in which he found himself the plaintiff personally acted with reasonable promptitude in doing all he could reasonably and effectively have done to commence this action.

45. It is true however that the legal aid officer who handled the plaintiff's case after the first application for legal aid had been made was dilatory in the sense that due to his misunderstanding of the law concerning the limitation period, he allowed that period to expire without issuing a writ.

46. It is, of course, a matter of conjecture as to what would have happened had the insurers provided the relevant information within a reasonable time before the expiration of the limitation period. Had this been done it is entirely possible that prior to the expiration of that period the legal aid officer might have lodged the application to the court for leave under the Companies Ordinance to issue a writ against the defendant. His erroneous view of the law might well have been drawn to his attention with the result that he would have been able to commence the action within time.

47. Mr. Wong submits that notwithstanding such considerations the plaintiff has an unanswerable claim in damages against the Crown as a consequence of the negligence of the legal aid officer, and that when weighing the degree of prejudice the plaintiff has suffered, a highly relevant consideration must be that if no direction is made under section 30(1) he will have a claim against the Crown for the full damages that he could have recovered against the defendant if the action had proceeded.

48. In taking this consideration into account however I am conscious of Lord Diplock's words in Thompson v. Broom at page 750.

"Section [30] appears to be drafted on the further assumption that the expiry of a limitation period before his action has been started must always prejudice the plaintiff in same degree. With great respect to the opposite view taken by the court of Appeal in Browes v. Jones & Middleton, June 15, 1979, this too seems to me self-evident, unless the plaintiff's prospects of success in the action if it is allowed to proceed are so hopeless as to deprive it even of nuisance value - which is very far from being the instant case. The degree to which the plaintiff would be prejudiced by being prevented from proceeding with his action will be affected by how good or bad would have been his prospects of success; so too it will be affected by the extent to which the plaintiff will be able to recover in an action for negligence against his own solicitor the value of his lost prospects of success. But even where, as in the instant case, and as in Browes, if the action were not allowed to proceed the plaintiff would have a cast-iron case against his solicitor in which the measure of damages will be no less than those that he would be able to recover against the defendant if the action were allowed to proceed, some prejudice, although it may be only minor, will have been suffered by him. He will be obliged to find and to instruct new and strange solicitors; there is bound to be delay; he will incur a personal liability for costs of the action up to the date of the court's refusal to give a direction under section [30]; he may prefer to sue a stranger who is a tortfeasor with the possible consequences that may have on the tortfeasor's insurance premiums rather than to sue his former solicitors with corresponding consequences on their premiums."

49. Furthermore there is no specific evidence in the affidavit or affirmations concerning the possible liability incurred by the Crown as a consequence of the legal aid officer's mistaken view of the law. Matters which may be of importance in determining whether such liability had been incurred are whether legal aid had been granted at the relevant time and, the fact that, irrespective of the merit of the plaintiff's claim, the Director of Legal Aid was obliged to ensure that before he expended public funds on litigation there was a reasonable prospect not only that such would succeed but also that any Judgment that might be obtained in favour of the plaintiff would be fruitful.

50. It seems to me therefore that Mr. Wong's assertion that the plaintiff has an unanswerable claim against the Crown is an overstatement of the position.

(f) the steps, if any, taken by the plaintiff to obtain medical, legal or other expert advice and the nature of any such advice he may have received.

51. As I understand Mr. Wong's submissions, no complaint is made against the plaintiff in respect of this paragraph.

52. At page 752 of the report of Thompson's case Lord Diplock observed-

"The onus of showing that in the particular circumstances of the case it would be equitable to make an exception lies upon the plaintiff; but, subject to that the court's discretion to make or refuse an order if it considers it equitable to do so is, in my view, unfettered. The conduct of the parties as well as the prejudice one or other will suffer if the court does or does not make an order are all to be put into the balance in order to see which way it falls."

53. For the reasons that I have given in the foregoing analysis of each of the particular circumstances referred to in subsection (3), and having considered them in the light of all the circumstances of the case, I have come to the firm conclusion that it would be equitable to allow this action to proceed having regard to the degree to which the provisions of section 27 prejudice the plaintiff and to the degree to which my decision will or may prejudice the defendant or any person whom he represents.

54. Accordingly I direct that the provisions of section 27 shall not apply to this action.

55. I make an order nisi that costs be in the cause.

Representation:

Mr. F. Eddis assigned by D.L.A. for the Plaintiff.

Mr. Wesley Wong instructed by Messrs. Johnson, Stokes & Master for the Defendant.