Sanwa Development Ltd. (in Liquidation) v. Chan Kar Keung and Another

HCA007002/1994

No. A7002 of 1994

H E A D N O T E

Discharge of Mareva injunction on ground that there has been inexcusable and inordinate delay on the part of the Plaintiff in proceeding with the action.

No. A7002 of 1994

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

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Coram: The Hon. Mr. Justice Sakhrani in Chambers

Date of Hearing: 4 December 1998

Date of Judgment: 4 December 1998

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J U D G M E N T

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1. This is the Defendants' application for an order that the Mareva injunction which has been obtained by the Plaintiff in these proceedings be discharged. The complaint is made that the Plaintiff has been guilty of inordinate and inexcusable delay in proceeding with this action. For that reason, the Defendants ask that the Mareva injunction be discharged.

2. The original Plaintiff in these proceedings was Mr. Lau Chuen Tai and on the 13th June 1995, Rogers J. (as he then was) granted a Mareva injunction against these Defendants. By his order, he gave liberty to the Defendants to apply to vary or discharge the order provided notice of the application should be given to the Plaintiff's solicitors as soon as possible prior to any application.

3. On 5th June 1997, Patrick Chan J. (as he then was) ordered that leave be granted to the present Plaintiff to be substituted as the Plaintiff in this action and he also gave directions as to filing of amended pleadings. By the said order, all previous orders made in favour of the previous Plaintiff Lau Chuen Tai should stand. This included the Mareva injunction. Shortly after that order was made, the amended statement of claim was filed and served and the re-amended defence of these Defendants was filed. That was done on 8th July 1997.

4. The Plaintiff complains that the re-amended defence was never served on them and somehow uses that an excuse for some delay. I understand from Mr. Chain, for the Defendants, that according to the notes of attendance of his instructing solicitors at the hearing before Master Chu on 7th July 1997, service of the re-amended defence was dispensed with. However, that is not correct according to the endorsement on the summons in the court file. But I have no doubt that must have been a misunderstanding on the part of Mr. Chain's instructing solicitors. Having filed the re-amended defence on 8th July 1997, I can see no reason why they would not serve the re-amended defence on the Plaintiff unless they felt that that was not required.

5. There has been no step in the proceedings after the filing of the re-amended defence. On 8th July this year, a Notice of Intention to Proceed after one year's delay was filed by the solicitors for the Plaintiff. However, no step has been taken since then in the proceedings.

6. According to the affidavit of Chun See Ching, who is an assistant solicitor in Messrs. Hong Lee & Co., solicitors for the Plaintiff, the witness statement of Mr. Lau on behalf of the Plaintiff was prepared on 22nd June 1998. I observe that it has taken an inordinately long time for that to have been done because the original order for directions was made on 15th December 1994 which provided for exchange of witness statements.

7. The solicitors for the Plaintiff wrote to the solicitors for the Defendants on 22nd June asking for their consent that both parties' witness statements be exchanged out of time. They also asked the solicitors for the Defendants to revert back to them with the Defendants' instructions on or before 26th June 1998 or they would apply to court for such extension of time. The Defendants did not respond to that letter and needless to say, no application to court for extension of time as to exchange of witness statements has been made up to date hereof. Mr. Chung See Ching tried to explain this by saying that they also wrote to the Plaintiff's accountant in order to prepare a witness statement of the accountant which was anticipated to have been completed within two weeks. However, I have been informed that by a letter dated 27th November 1998 the accountants were unable to render any assistance in the provision of a witness statement. It has taken six months to get that response from the accountants. That simply is not good enough, in my view.

8. Against the background of the Notice of Intention to Proceed that was filed this year, there was an earlier Notice of Intention to Proceed after one year's delay filed by the Plaintiff dated 30th December 1996. There appears to be a history of delay on the part of the Plaintiff in these proceedings. The delay of waiting for about a year in preparing the witness statement after pleadings had been re-amended is inexcusable, in my view, bearing in mind the earlier order that had been made for exchange of witness statements on 15th December 1994.

9. In the case of Newsgroup Newspapers Limited v. the Mirror Group Newspapers (1986) Limited, [1991] F.S.R. 487 it was held that an interlocutory injunction would be discharged as the Plaintiff was guilty of delay in proceeding with the action since the grant of the interlocutory injunction and that the delay was inordinate and inexcusable.

10. In my judgment, the position is a fortiori when one deals with a Mavera injunction which has been described as one of the laws two nuclear weapons, the other being the Anton Piller Order. I respectfully agree with what Hoffmann J. (as he then was) said in his judgment at 489:

"An interlocutory injunction is an order which restricts a defendant's liberty at a time when there has been no finding of wrongdoing by the court. It is done in order to preserve the position, pending a determination of the merits, in cases when the court thinks that justice so requires. In my judgment it is incumbent upon a plaintiff whose position has been protected in that way by an interlocutory injunction to proceed with the action with due diligence so as to limit as far as possible the period during which the defendant's liberty is restricted without there having been any determination of the merits. In Lloyds Bowmaker Limited v. Britannia Arrow Holdings plc [1988] 1 W.L.R., 1337 Glidewell L.J. said (at page 1347) in relation to a Mareva injunction that a plaintiff who has succeeded in obtaining such an injunction is 'in my view under an obligation to press on with his action as rapidly as he can so that if he should fail to establish liability in the defendant the disadvantage which the injunction imposes upon the defendant will be lessened so far as possible.'

Dillon L.J. (at page 1349) said 'where a party has obtained a Mareva injunction, that party is bound to get on with the trial of the action-not to rest content with the injunction. The injunction is merely ancillary to the trial of the action to hold the position until the action comes on for trial.'

A Mareva injunction is a particularly onerous form of restriction on the defendant's liberty and to that extent the obligation upon a plaintiff to bring on the action as soon as possible is the stricter, but in principle it seems to me that the considerations to which the learned lords justice referred also apply to other forms of interlocutory relief which prevent the defendant from doing what he would otherwise be free to do."

11. It is, of course, incumbent on the Plaintiff to get on with the action and to proceed to trial as expeditiously as possible having obtained a Mareva injunction against the Defendants. The evidence, in my view, shows clearly that the Plaintiff's delay to proceed to trial is inexcusable and inordinate. For those reasons, I discharge the Mareva injunction.

12. I discharge the Mareva injunction granted by Rogers J. on 13th June 1995 and continued by Patrick Chan J. on the 16th June 1995. Costs of the application to the Defendants to be taxed if not agreed and to be paid forthwith. I order that there be an inquiry to be held before a Master as to what damages the Defendants have suffered.

Representation:

Mr. Timothy Ling, instructed by M/s. Hong Lee & Co for Plaintiff

Mr. Benjamin Chain, instructed by M/s. King & Co. for Defendants

Appeal by the plaintiff to Court of Appeal dismissed. Please refer to CACV310/1998 dated 4 March 1999