Overseas Business Corporation Ltd v. Textile Alliance Ltd and Another
Read the full judgment text of HCA 591/1973 on BabelCite. This High Court CFI judgment was delivered on 13 July 1979.
1. On the 7th March, 1973 a writ was issued at the instance of the plaintiff wherein it claimed $938,346.97 being the amount due for goods sold and delivered and interest. On the 25th July, 1973 on the hearing of an Order XIV inter partes summons the defendant was given leave to defend.
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HCA000591/1973
----------------- Coram: Trainor, J. Date of Judgment: 13 July 1979 --------------------------------------------------- REASONS FOR JUDGMENT --------------------------------------------------- 1. On the 7th March, 1973 a writ was issued at the instance of the plaintiff wherein it claimed $938,346.97 being the amount due for goods sold and delivered and interest. On the 25th July, 1973 on the hearing of an Order XIV inter partes summons the defendant was given leave to defend. 2. On the 3rd October, 1973 the second defendant applied to be joined and on 10th October an order to that effect was made. 3. On the 12th October, 1973 a joint Defence and Counterclaim was delivered by the defendants and on the 21st March, 1974 the plaintiff delivered a Reply and Defence to the Counterclaim. The matter remained dormant after that until the 19th February, 1975 when the plaintiff received permission, by consent, to amend the Reply and Defence to the Counterclaim. 4. On the 20th February, 1975 the defendants sought further and better particulars of the amended Reply and Defence to the Counterclaim and on the 11th March, 1975 an order that they be given was made by the acting Registrar. 5. On the 18th August, 1975 the plaintiff filed its list of documents and the defendants did the same on the 26th November, 1975. 6. On the 12th December, 1975, with the consent of the defendants the case was set down for trial. 7. On the 6th January, 1976 an application was made by the plaintiff, supported by the defendants, to Cons, J. that the case be taken out of the pending list and set down for hearing on a date to be fixed in consultation with counsel. The application was granted and the case was subsequently set down for hearing on the 26th April, 1976. 8. In the meantime the defendants, on the 27th February, 1976, applied to the Registrar for security for costs invoking s.357 of the Companies Ordinance. That was a matter that may only be dealt with by a judge, and eventually, on the 31st March, the plaintiff was ordered to give security to the satisfaction of the Registrar. The Registrar on the 8th April assessed the security in the sum of $35,000. 9. It will be seen from above that while the matter proceeded without undue haste the tempo was accepted by both parties. 10. The defendants in their Defence admitted that the sum of $934,493,74 was due but counterclaimed in the alternative for $337,732,03 or $1,276,08.or 939,112.00. 11. An order for the winding-up of the plaintiff was made on the 23rd April, 1976 and on the 13th July, 1976 the solicitor for the Official Receiver wrote to the defendants claiming the $934,493.74 which the defendants admitted to be due. The defendants replied stressing their counterclaim. In the ensuing correspondence the Official Receiver informed the solicitors for the defendants that he had assets available from the liquidation and that costs would be no problem. The correspondence between the Official Receiver and the defendants' solicitors appears to have petered out and nothing further happened after the last letter from the Official Receive dated the 3rd August, 1976 until about two years later, the 23rd October, 1978 to be precise, when the solicitors for the plaintiff served notice of intention to proceed. Nothing had been done by the plaintiff in compliance with the order for security for costs. I understand from an affidavit of Mr. Kenneth Bryson, a solicitor in the firm acting for the plaintiff, that an effort to pay the $35,000 security into court on the 5th January, 1979 failed as the order to pay in provided for the payment to be made in fourteen days. On the 16th January, the solicitors for the plaintiff informed those of the defendants of their inability to lodge security out of time and asked them to the late lodgement to consent. Consent was refused and a formal application for leave to pay in was made on 7th February, 1979 and was granted and payment in was made on the 8th February. 12. On the 7th March, 1979 the plaintiff's solicitors wrote to the solicitors for the defendants suggesting to them that they
The defendants' solicitors refused saying that they had received instructions to make application to the Court to have the proceedings struck out for want of prosecution. 13. On the 27th March, 1979 the defendants took out a summons seeking an order that the proceedings be struck out by reason of the plaintiff's inordinate and inexcusable delay. The Registrar dismissed the application and ordered that costs be in the cause. 14. The defendants now appeal. 15. For the hearing before the Registrar a Mr. Pao Yeu-tyen filed an affirmation in which he recited what I have set out above, though in more detail. He alleged that it is not now possible to have a fair trial of the action as the delay in bringing the matter to hearing has caused serious prejudice to the defendants. He alleged that the recollection of witnesses of oral promises and representations made on behalf of the plaintiff will be materially affected by the passage of time, and that the defendants have suffered and will continue to suffer prejudice in relation to the conduct of their business by reason of the uncertainty as to when the matter might be disposed of; who the witnesses were he did not state nor did he indicate the nature of their evidence. He did say that an important witness, a Mr. Fu, who was up till recently in the employment of the second defendant may not be available; two letters recently sent to him remain unanswered. 16. Mr. Bryson, in a replying affidavit pointed out that apart from a relatively small sum the plaintiff's claim is conceded by the defendants and the real contest is whether or not the defendants can establish their counterclaim; the defendants are in effect seeking the dismissal of the Defence. He later adopted the line that even if the plaintiff did nothing to expedite the hearing of the action neither did the defendants, a point to which I attach little weight, if any. There is no obligation on a defendant to bring on a case for hearing nor is there any sanction if he does nothing. 17. Another point taken by Mr. Bryson was that but for the fact that security for costs was ordered on the 31st March, 1976 on the application of the defendants and that all proceedings were stayed until that was done the action would have come on for trial on the 26th April, 1976. The fact is that the defendants got an order to which they were perfectly entitled and pursuant to it the Registrar assessed the amount of security at $35,000 on the 8th April, 1976 and ordered it to be lodged within fourteen days. Had the plaintiff complied with the order the case might have proceeded, but nothing was done until the 23rd October, 1978, more than two years later. It is true that there was an order that the plaintiff be wound up but one must assume from the correspondence between the Official Receiver and the defendants' solicitors that he had approved of the proceedings. The last letter I have seen for him is dated the 3rd August, 1978 and in it he indicates his intention to obtain counsel's opinion, but it would appear from the correspondence that such an opinion was being sought as to whether or not he was entitled to recover the amount admitted by the defendants to be due irrespective of the counterclaim. 18. A further point made by Mr. Bryson was that at about the time security for costs was ordered a Mr. Abbas, a director - "the alter ego" - of the plaintiff had permanently left Hong Kong. Mr. Bryson stated that it was necessary for the Official Receiver at that time to consider if it were in the interests of creditors to proceed, the extent to which the plaintiff was hampered by the absence of Mr. Abbas and the necessity to look for alternative sources of evidence. If the plaintiff's argument is valid the argument of the defendants that an important witness has failed to reply to their letters is equally valid. 19. In the case of Birkett v. James(1) it was held that the power of a court to dismiss an action for want of prosecution should be exercised only where the plaintiff's default had been intentional and contumelious, or where there had been inordinate and inexcusable delay on his or his solicitors' part giving rise to a substantial risk that a fair trial would not be possible or to serious prejudice to the defendants. It is on the basis of inordinate and inexcusable delay and consequent prejudice that the defendants rely. 20. In my opinion the only period that is relevant to this application is that from April 1976 to date. Until April 1976 such delays as there were on the plaintiff's part were condoned by the defendants, but no steps were taken by the plaintiff from then until the 23rd October, 1978. 21. Was that delay inordinate and inexcusable? 22. In April, 1976 the case had been set down for trial and all formalities concluded even to the extent that discovery of documents had been made by both sides. It is true that an order for security for costs had been made and all proceedings stayed pending the furnishing of it within fourteen days but the plaintiff was in a position to furnish it in July, 1976 but did nothing about it. It served notice of intention to proceed on the 23rd October, 1978 but even then took no further action until, according to the affidavit of Mr. Bryson and a letter dated the 16th January, 1979 exhibited thereto, an attempt was made to pay $30,000 into court. It was pointed out to the plaintiff's solicitors in the High Court office that the payment in was out of time but in any case the amount was $35,000 and the office refused to accept it. Eleven days later the plaintiff's solicitors wrote to the defendants' solicitors asking for their consent to a late lodgment. This was refused and an order was obtained from the Registrar and the money was lodged on the 7th February, 1979. For two years, until it served a notice of intention to proceed, the plaintiff did nothing. But even then, the plaintiff having given notice of its intention to proceed was in no position so to do; all further proceedings had been stayed until security was given. One would think that having given notice of intention to proceed, the plaintiff would have complied immediately with the order to give security; but it did nothing for a further three months. In result the order for security had been ignored for almost three years. Indeed, it might have been argued before me that the plaintiff's behaviour was:
23. Such conduct is not relied on by the defendants. They rely on inexcusable and inordinate delay on the part of the plaintiff or its solicitors giving rise to a substantial risk that a fair trial would not be possible or to a serious prejudice to the defendants. 24. In my opinion the plaintiff and its solicitors were guilty of inordinate and inexcusable delay between April 1976 and January, 1979, the time when an effort was made to comply with the order to lodge security for costs. 25. Did the delay give rise to a substantial risk that a fair trial would not be possible? 26. Mr. Pao, a director of the 1st defendant, made an affirmation and suggests that a fair trial will be prejudiced in that the recollection of witnesses of oral promises made by representatives of the plaintiff prior to March 1973 will be affected by the lapse of time, what witnesses or how many he does not say. He also says, as I have mentioned before, that a necessary witness has left the employment of the 2nd defendant and "may not now be available to give evidence". He says that he knows the address of this witness but that two letters sent to him in which he was ".... invited to indicate whether he would be willing to attend the trial to give evidence ...." remain unanswered. The deponent continues ".... it is reasonable to anticipate that in those circumstances Mr. Fu will not be willing to give evidence for the defendants". It is difficult to consider that that was intended to be a serious argument. I feel sure that the deponent's legal advisers are aware of the efficacy of a subpoena ad test or duces tecum in obtaining the appearance of a reluctant witness. To compound the difficulty of considering the argument as serious the deponent continues: "Copies of the letters addressed to Mr. Fu are available for inspection by this Honourable Court." It is to be noted that no reference is made by the deponent to a Mr. Liang Shaw Nong, stated in an affirmation of the same Mr. Pao and affirmed on the 18th April, 1973 to be the mill manager of the second defendant. In that affirmation Mr. Pao deposed that he was informed by Mr. Liang that $1,276,080 losses were incurred by the second defendant because a number of looms of the second defendant had to cease operation as a result of non-deliveries or late deliveries of cotton yarn by the plaintiff. 27. But Mr. Liang also made an affirmation. He deposed, of his own knowledge, to the non-deliveries and delays in deliveries by the plaintiff and the loss of production by the second defendant. In fact he prepared a schedule setting out in elaborate detail the deliveries made by the plaintiff and the non-deliveries. It was, according to the affirmation of Mr. Pao, for that same purpose that Mr. Fu was required to give evidence. 28. The defendants have not produced any evidence sufficient to satisfy me that the delay of the plaintiff or his solicitors, a deplorable though it may be, will prevent a fair trial. 29. Will there be a serious prejudice to the defendant if proceedings continue? 30. In Biss v. Lambeth Health Authority(2) Denning M.R. at 389 said:
31. In the present case it will be remembered that the defendants admit all but about $4,000 of the plaintiff's $938,346.97, claim and that relatively small sum is claimed as interest. They have acknowledged their indebtedness to the plaintiff and it is their duty to discharge it unless they can extinguish the debt in whole or in part by showing that the plaintiff is indebted to them or either of them. They are not like the defendants in the Biss case who were totally unaware of what the financial outcome of the case might be and whose witnesses were scattered all over the place, one of whom had left England for Africa. 32. The defendants have failed to show that the trial of this action will be prejudiced by the delay and they have not shown that there will be any prejudice to them in sense that the Master of the Rolls considered "prejudice" in the passage cited. 33. I dismiss this appeal with costs.
Representation: Mr. Charles Ching Q.C. & Peter Cheung (Deacons) for appellant. Mr. K. Bokhary (Johnson, Stokes & Master) for respondent. (1) [1977] 3 W.L.R. 38 (2) [1978] 1 W.L.R. |