Chevalier (E&M Contracting) Ltd v. Rotegear Development Ltd and Others

HCA1717/1990

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

ACTION NO.1717 OF 1990

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BETWEEN

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Before : Deputy High Court Judge Fung in Chambers

Date of Hearing : 2 June 2005

Date of Handing Down Judgment : 9 June 2005

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J U D G M E N T

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1.The 5^th defendant is applying to strike out the plaintiff’s action for :

(1) want of prosecution; and/or

(2) failing to set down for trial in compliance with the Order of Master Cannon dated 17 March 1993; and/or

(3) abuse of process.

2.The summons does not cover the counterclaim of the 5^th defendant.

3.Mr Pierrepont for the 5^th defendant indicated that his main thrust was abuse of process, and secondly inordinate and inexcusable delay.

Background

4.The facts of the case were more fully set out in the judgement dated 5 July 1994 of Barnett J in setting aside the summary judgement against the 5^th defendant.

5.Suffice it to say that the plaintiff claimed against the 1^st defendant the sum of about $4.8 million for payment under a construction contract dated 13 July 1988, or alternatively for breach of a settlement agreement dated 11 August 1988 (“the Agreement”).  The writ was issued on 14 March 1990.

6.The 2^nd to 5^th defendants were directors of the 1^st defendant.  The plaintiff claimed against the 2^nd to 5^th defendants the same said sum pursuant to a guarantee dated 11 August 1998 (“the Guarantee”).

7.The terms of the Agreement are :

“	1.	We hereby offer to settle the outstanding sum in respect of the above sub-contract works on the following terms :—
	1.1	We hereby confirm and acknowledge that an aggregate sum of HK$3,300,000.00 as to HK$1,300,000.00 being part of the purchase price for material and equipment delivered to site and as to the remaining HK$2,000,000.00 being part of the progress payment under the sub-contract, is now due and payable by us to your goodself.  We hereby expressly admit full liability of the aforesaid outstanding sums.  We shall in all events settle this sums by 6 installments in the following manner.
	1.1.1	a sum of HK$500,000.00 to be paid forthwith.  (Already Paid)
	1.1.2	a sum of HK$200,000.00 to be paid forthwith.  (Already Paid)
	1.1.3	a sum of HK$600,000.00 to be paid on or before 21 August 1989.
	1.1.4	a sum of HK$800,000.00 to be paid on or before 30 September 1989.
	1.1.5	a sum of HK$600,000.00 to be paid on or before 30 October 1989.
	1.1.6	a sum of HK$600,000.00 to be paid on or before 15 November 1989.
	1.2	If we fail to pay any of the aforesaid instalments in the manner aforesaid, all the remaining instalments will become payable immediately and be subject to interest charged at the rate of 1% per month from the date of default until full payment.
	1.3	Notwithstanding the aforesaid, we also hereby admit and acknowledge liability to you for the remaining balance of the purchase price of material and equipment at HK$200,000.00, we shall in any event pay you the said sum of HK$200,000.00 immediately after the manual start-up of chiller installations on your part.
	1.4	Notwithstanding the aforesaid, we also hereby admit and acknowledge liability to you for the remaining balance of the progress payment of the above works.  In this connection, we undertake to settle all subsequent invoices issued by you for further payments under the sub-contract within 45 days after your insurance of the same.  Such payment shall however be subject to your manual start-up of the chiller installation within 28 days after the hand-over of site for cooling tower area and upper roof area provided that you are entitled to ask for extension of time to do the requisite works in case of our default or that of other sub-contractors at the site under the sub-contract works.
	1.5	We will procure our directors namely Mr Ng Fuk Lung, Mr Ng Fuk Hing, Mr Ngai Man Fai and Mr Wong Yan Wai to execute a joint and several personal guarantee in your favour to secure full and due performance of the terms herein contained.
	1.6	We undertake to indemnify and keep you indemnified against all costs and expenses (including legal costs and disbursements on a full indemnity basis) incurred by you in respect of any matter of proceedings in connection with this letter.”

8.The terms of the Guarantee are :

“To : Chevalier (E& M Contracting) Ltd

Personal Guarantee

In consideration of your agreeing to abstain for the time being from enforcing payment of HK$3,300,000.00 (hereinafter called “the said debt”) due to you by Rotegear Development Limited. (hereinafter called “the debtor”) of which we are directors and also to accept the debtor’s proposed settlement terms as stipulated in the letter written to you by the debtor on the even date, a copy of which is attached to this Guarantee and initialed by me for the purpose of identification, we Ng Fuk Hing, Ng Fuk Lung, Ngai Man Fai, and Wong Yan Wai hereby jointly and severally absolutely and unconditionally guarantee the full payment of the sum and the due performance and observance of the settlement terms upon the following conditions :

1.	If the debtor shall make default in the payment of any sum under the said letter or in the performance of observance of any of the provision on its part contained in the said letter, we and each of us will jointly and severally upon a written request by you fully pay you the sum which shall be so in arrear or, as the case may be, pay to you all losses damages expenses and costs which you shall be entitled to recover by reason of such default.
2.	We further jointly and severally undertake that we personally guarantee the due performance of all the terms set out in the said letter by the debtor and that we assume full responsibility for the same.
3.	Any arrangement dealings made between you and the debtor or your neglect of forebearance in requiring or enforcing payment or other obligation against the debtor shall not in any way prejudice or affect our liability hereunder.
4.	This guarantee shall be governed by and construed in accordance with the laws of Hong Kong.”

9.On 20 February 1992, default judgment was entered against the 1^st, 2^nd and 4^th defendants.  The plaintiff did not proceed against the 3^rd defendant as a receiving order was made against him on 3 July 2001.  The 1^st defendant was dissolved on 16 October 1998.

10.On 17 March 1993, Master Cannon made an order for the setting down the case for trial in the running list within 42 days.  At that stage, the plaintiff indicated that it had no witness, and the 5^th defendant had one factual witness and one expert witness.  Then on 18 August 1993, the plaintiff re-re-amended the Statement of Claim.  On 29 November 1993 the plaintiff took out an Order 14 application against the 5^th defendant for $1.8 million being part of the sum claimed.  On 24 December 1993, the 5^th defendant took out a summons to dismiss the action for disclosing no cause of action.

11.The 5^th defendant raised two main points in defence :

(1)	he is entitled to set-off by way of counterclaim damages due to the 1st defendant for delay in completion of work and defective work for an amount above the amount claimed;
(2)	the plaintiff’s cause of action has not accrued as no written request has been given under clause 1 of the Guarantee.

12.The striking out application was heard first.  On the written request point, the plaintiff argued that it had sent letter of demand to the 1^st defendant, copies of which were sent to the 2^nd the 5^th defendants.  The striking out application was dismissed.

13.In the Order 14 application, the plaintiff sought judgment against the 5^th defendant for the sum of $1.8 million, being the net sum under clause 1.1 of the Agreement after deducting the payment of $1.5 million already made by the 1^st defendant.  For the purpose of the Order 14 application, it was conceded by the plaintiff that no written request was given under the Guarantee.

14.In his judgment setting aside the summary judgement entered by the master, Barnett J dealt with the various points raised by the plaintiff :

(1)	the Agreement was not a promissory note such as to preclude any set-off against damages due to the 1st defendant;
(2)	it is arguable that the 1st defendant did not waive any right of set-off;
(3)	on the point that clause 2 of the Guarantee created two separate covenants or obligations distinct from the obligation in clause 1 in that (a) the 5th defendant was guaranteeing due performance of the Agreement, or (b) the 5th defendant was assuming full primary obligation for the 1st defendant, whereby in both cases no written request was necessary, it is at least arguable that written request was a condition precedent to the recovery of any payment by the plaintiff, and it may be that if the matter goes to trial, there will be admissible evidence to show objectively the true intention of the parties to the Guarantee.

15.There is common ground that after the hearing on costs before Barnett J on 1 September 1994, no steps has been taken in or concerning the proceedings for eight years until September 2002. 

16.On 12 September 2002, solicitors for the 5^th defendant wrote to the plaintiff’s solicitors inviting them to discontinue the action by 17 September 2002, failing which application would be made to strike out the claim for abuse of process and/or want of prosecution immediately.  On the same day, the plaintiff’s solicitors wrote back asking for the withholding of further action pending the seeking of instructions.  On 19 September 2002, solicitors for the 5^th defendant agreed to extension of time to 24 September 2002.  On 27 September 2002, the plaintiff’s solicitors wrote back stating that the plaintiff did not agree to discontinue the action.

17.Nothing took place until the summons herein was taken out on 27 January 2005.  On 15 March 2005, the plaintiff’s solicitors wrote to the solicitors for the 5^th defendant, enclosing a written request for payment under the Guarantee addressed to the 5^th defendant, stating that should the 5^th defendant failure to accede to the demand, legal proceedings would be commenced as an alternative claim and without prejudice to the action herein, and that the plaintiff did not concede that written request for payment is condition precedent to the plaintiff’s recovery under the Guarantee.

Want of prosecution

18.Although Mr Pierrepont’s main argument is on abuse of process, I shall deal with the inordinate and inexcusable delay point first.

19.The main principles for striking out for want of prosecution (as applied in Hong Kong) are set out by the English House of Lords in Birkett v. James [1978] AC 297 per Lord Diplock at 381F-319A :

“The power should be exercised only where the court is satisfied either : (1) that the default has been intention and contumelious e.g. disobedience to a peremptory order of the court or conduct amounting to an abuse of the process of the court; 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 to have caused serious prejudice to the defendant either as between themselves and the plaintiff or between each other or between them and a third party.”

20.Mr Shaw for the plaintiff conceded that there was inordinate and inexcusable delay without proffering any explanation.  On the other hand, he submitted that the plaintiff had failed to prove any serious prejudice.

21.Mr Pierrepont relied on the following prejudice to the plaintiff :

(a) evidential prejudice of loss of memory by the 5^th defendant;

(b) difficulty in tracing the 2^nd to 4^th defendant;

(c) deprivation of taxation and payment of the Order 14 costs.

22.In considering evidential prejudice, the issues at trial will be :

(1) construction of the Guarantee;

(2) the set-off of damages due to the 1^st defendant.

23.Mr Pierrepont submitted that there is an ambiguity in clauses 1 and 2 of the Guarantee, and as an exception to the parol evidence rule, evidence of the background and circumstances at the time of the agreement will be admissible in construing the contract.  He referred to the judgment of Barnett J that evidence may be admissible on this point.

24.The 5^th defendant did not depose as to what issues in the case that his memory had failed him.  Mr Pierrepont referred to Roebuck v. Mangovin [1994] 2 AC 224 for the proposition that the court can infer a loss of memory as a result of substantial delay even without specific evidence on the part of the defendant.  He cited Lord Browne-Wilkinson at 234E-G :

“In the ordinary case the prejudice suffered by a defendant caused by the plaintiff’s delay is the dimming of witnesses’ memories.  Where there are two periods of delay, how can it be shown that a witness has forgotten during the later, rather than the earlier, period?  We are referred to an unreported decision of the Court of Appeal, Hornagold v. Fairclough Building Ltd. (unreported), 27 May 1993; Court of Appeal (Civil Division) Transcript No. 634 of 1993, where there was a difference of opinion as to whether in such a case it was necessary to adduce specific evidence that the prejudice flowed from the loss of memory in the later period.  I have no doubt that such evidence is not necessary and that a judge can infer that any substantial delay at whatever period leads to a further loss of recollection.  But even so the attempt to allocate prejudice to one rather than another period of delay is artificial and unsatisfactory.”

25.Mr Shaw referred to other cases for the proposition that the onus of proving prejudice or a substantial risk to a fair trial rested on the person who asserted it.  A mere assertion that the prejudice or risk had been caused by the inordinate or inexcusable delay is not enough.

26.In Harbagold v. Fairclough Building Ltd & anor TLR 3 June 1993 (CA), Roch LJ (Glidewell LJ concurring) was reported to be saying that there had to be more than the bald assertion that the delay had prejudiced the defendants.  There had to be some indication of the prejudice, for example, that no statement was taken at the time of the material events so that a particular witness who would have been called on a particular issue had no means of refreshing his memory, or that a particular witness who was to be called on a particular issue was of an advanced age and no longer wished to give evidence or had become infirm and unavailable in the period of the further inordinate and inexcusable delay.  It was incumbent on defendants always to identify a particular witness or a particular respect in which their evidence had been impaired or a particular reason why they said that there was a substantial risk that there could no longer be a fair trial of the issues.  Were the mere assertion of prejudice to be sufficient, then that would in effect transfer the burden of proof on that issue to the plaintiff, a submission that was expressly rejected by the House of Lords in Department of Transport v. Chris Smaller Ltd [1989] AC 1197.

27.In Slade v. Adco Ltd TLR 7 December 1995 (CA), the English Court of Appeal upheld the judge in dismissing the plaintiff’s claim for personal injuries.  Neill LJ (Glidewell LJ agreeing) was reported as saying that it was unwise to try to lay down any strict guidelines for the exercise of the judge’s discretion in the individual case.  The onus was on the person asserting prejudice or a substantial risk to a fair trial to establish it.  He would have to show that the prejudice had been caused by the inordinate and inexcusable delay since the issue of the writ.  A mere assertion was not enough.  The individual judge should be left to assess the prejudice and the risk and the adequacy of the evidence in the light of the individual circumstances of the case.  That approach was in accordance with the guidance given by the House of Lords in Roebuck v. Mangovin.  Although the case was clearly the borderline, there was sufficient material before the judge to entitle him to exercise the discretion in the way he did.  Auld LJ (dissenting) was reported in saying that there must normally be some evidence from which the likelihood of serious prejudice to the defendant could be inferred.  The mere identification of the witnesses and of the importance of the evidence that they were to give did not satisfy the test.  Something more was required, some evidence or circumstances from which it could be inferred that the delay had caused some specific problem for one or both of the witnesses, as distinct from a general impairment of the memory from the passage of time and that it was likely to seriously prejudice the defendant. 

28.In Lui Chun Kwong v. Kier Hong Kong Ltd & ors [1995] 1 HKC 695, Waung J cited the above passage in Roebuck v. Mangovin at 704B-D, and went on to say at 704D-G :

“While accepting that this observation from the highest court in the United Kingdom must be of the most persuasive authority, I should however also exercise caution to distinguish critically between the non-approval by the House of Lords of one specific aspect of the Hornagold judgment and the otherwise apparent general validity of the Hornagold judgment, namely the requirement for evidence of some specified prejudice on specified issue.  I am of course conscious that I am much handicapped in that I do not have the benefit of a full transcript of the Hornagold judgment and on the basis that the Times report of Hornagold judgment is an accurate report of the judgment, I do not read either from the above-cited passage of Lord Brown-Wilkinson or from the arguments of counsel in the report of Roebuck v. Mungovin as suggesting that Hornagold v. Fairclough Building Ltd had been overruled by the House of Lords.  On that basis therefore, I will continue to regard it as being good law that evidence of specified prejudice on specified issue is required for an application to dismiss for want to prosecution.”

29.Unlike Roebuck v. Mangovin or Lui Chun Kwong, here, we are not concerned with earlier period of delay where the defendant had been estopped and thereafter the plaintiff was guilty of yet further inordinate and inexcusable delay, and whether the defendant had shown prejudice caused by that last period of delay as opposed to the totality of the delay.   Lord Browne-Wilkinson’s dictum on the point that specific evidence that the prejudice flowed from the loss of memory in the later period is not necessary and the judge can infer any substantial delay at whatever period leading to a further loss of recollection is not strictly relevant here.  It does not assist the 5^th defendant when it is incumbent upon him to show specifically the prejudice caused by a fading memory in the context of the issues and other available evidence in this case.

30.Mr Shaw pointed out that the present case is a commercial dispute and there was large amount of contemporaneous documents and correspondence.  Mr Shaw said it is a case turning on the documents.  Also, the 5^th defendant should have given statements to his solicitors and that could assist him in refreshing memory.  The 5^th defendant had engaged expert on the counterclaim of damages and they had rendered a 94-page detailed report on 19 May 1994.  Granted there must have been some fading of memories, but in the absence of more specific complaint, I am unable to find any evidential prejudice to the 5^th defendant.

31.As to the disappearance of other defendants, the 5^th defendant had no contact with them since 1991, well before any delay.  There is nothing to show what evidence they are likely to give.  In such circumstances, I find their disappearance is neutral.

32.As to delay in taxation of costs, Mr Pierrepont estimated that the costs on the Order 14 application amounted to between $300,000 and $400,000.  Mr Shaw pointed out that there was a half-day hearing before the master, and a full-day hearing before Barnett J, and should be between $100,000 and $200,000.  Further, there are various costs orders in favour of the plaintiff.  In view of my finding on the other prejudice, I do not consider the delay in taxation of costs amounted to such serious prejudice to the 5^th defendant so as to satisfy the test in Birkett v. James.

33.Mr Pierrepont relied on the failure to set down both as contumelious default, as well as evidence of abuse of process.

34.Under Order 34, rule 2(2) of the Rules of the High Court (Cap.4A) :

“(2)

Where the plaintiff does not, within the period fixed under paragraph (1), set the action down for trial, the defendant may set the action down for trial or may apply to the Court to dismiss the action for want of prosecution and, on the hearing of any such application, the Court may order the action to be dismissed accordingly or may make such order as it thinks just.”

35.On contumelious default, Mr Shaw submitted that quite obviously, the Order to set the case down within 42 days had been overtaken by the subsequent events of re-re-amendment, striking out for no cause of action and Order 14 application.  I agree that in such circumstances, it cannot be shown that the default was intentional and contumelious.  Mr Pierrepont submitted that the failure to vary the Order or to extend time was in complete disregard of the rules of the court and with full awareness of the consequences and can also be regarded as contumelious conduct.  I think this point is really on abuse of process which I shall proceed to deal with.

Abuse of process

36.In Grovit v. Doctor [1997] 1 WLR 640 (HL), Lord Woolf adopted a new approach fromin Birkett v. James, and his Lordship said at 647G-648A :

“… I am satisfied that both the Deputy Judge and the Court of Appeal were entitled to come to the conclusion which they did as to the reason for the appellant’s inactivity in the libel action for a period of over two years.  This conduct on the part of the appellant constituted an abuse of process.  The courts exist to enable parties to have their disputes resolved.  To commence and to continue litigation which you have no intention to bring to conclusion can amount to an abuse of process.  Where this is the situation the party against whom the proceedings is brought is entitled to apply to have the action struck out and if justice so requires (which will frequently be the case) the courts will dismiss the action.  The evidence which was relied upon to establish the abuse of process may be the plaintiff’s inactivity.  The same evidence will then no doubt be capable of supporting an application to dismiss for want of prosecution.  However, if there is an abuse of process, it is not strictly necessary to establish want of prosecution under either of the limbs identified by Lord Diplock in Birkett v. James [1978] AC 297.  In this case once the conclusion was reached that the reason for the delay was one which involved abusing the processing of the court in maintaining proceedings when there was no intention of carrying the case to trial the court was entitled to dismiss the proceedings.”

37.In New China Hong Kong Group Ltd & anor v. AIG Asian Infrastructure Fund LP & ors [2005] 1 HKLRD 383, the Court of Appeal allowed the appeal against striking out the action and considered the recently developed law in Grovit v. Doctor and other cases.  Woo VP said at 392, paras. 11 and 13 :

“	11.	It can be seen, therefore, that the ratio decidendi of Grovit v. Doctor [1997] 1 WLR 640 is that maintaining an action when there is no intention of carrying it to trial is an abuse of process rendering the action liable to be struck-out.  A though Lord Woolf intimated that this was not a significant inroad upon the principles endorsed by Birkett v. James [1978] AC 297, it in fact was, in the sense that the requirement to prove likely prejudice suffered by the defendant under the second limb of Birkett v. James has been rendered unnecessary.  This may, however, be regarded as an identification of a facet of abuse of process.”
	…
	13.	While inordinate delay was to be viewed more seriously by the courts thenceforth, as apparent from Lord Woolf’s warning, it does not mean that mere delay, without more, would amount to abuse of process.”

38.Woo VP also considered Culbert v. Stephen G Westwell & Co. Ltd & anor [1993] PIQR 54, where Parker LJ said at 65-66 :

“… An action may also be struck out for contumelious conduct, or abuse of the process of the court or because a fair trial in action is no longer possible.  Conduct is in the ordinary way only regarded as contumelious where there is a deliberate failure to comply with a specific order of the court.  In my view however a series of separate inordinate and inexcusable delays in complete disregard of the rules of the court and with full awareness of the consequences can also properly be regarded as contumelious conduct or, if not that, to an abuse of the process of the court.”

39.Woo VP also referred to Choraria v. Sethia [1988] CLC 625which followed Culbert v. Westwell, where Nourse LJ said at 630F :

“The law … may therefore be stated thus.  Although inordinate and inexcusable delay alone, however great, does not amount to an abuse of process, delay which involves complete, total or wholesale disregard, put it how you will, of the rules of court with full awareness of the consequences is capable of amounting to such an abuse, so that, if it is fair to do so, the action will be struck out or dismissed on that ground.”

Then Woo VP said at 394D :

“16.

Again, as I see it, Parker LJ was identifying another way of constituting an abuse of process or contumelious conduct, which is a series of inordinate and inexcusable delays in complete disregard of the rules of the court and with full awareness of the consequences.  Despite the court being satisfied that the plaintiff’s conduct amounts to an abuse in the manner described, as Nourse LJ observed, it is still necessary for the court to consider whether it is fair to strike-out the action.”

40.On the wholesale disregard of the rules, Woo VP held that mere inaction and delay per se would not be sufficient to justify the dismissal of the action based on abuse of process.  His Lordship said at 397H :

“32.

It is clear from what was said by Aldous LJ in Barclays Bank v. Maling & Anor [1997] EWCA Civ 1480, Parker LJ in Culbert v. Stephen G Westwell & Co. Ltd & Anor [1993] PIQR 54 and Nourse LJ in Choraria v. Sethia [1998] CLC 625 that long inordinate and inexcusable delay does not amount to an abuse of process unless there is contumelious conduct or abuse of process.  Disobedience of a court order, albeit non-peremptory, is capable of being regarded as contumelious conduct.  On the other hand, inordinate and inexcusable delay in complete disregard of the rules of the court, without disobedience of any court order, can only amount to an abuse of process if and insofar as that delay or default was committed with the full awareness of the consequences.”

41.In agreeing with the judgment of Woo VP, Stone J sounded a note of caution in the “exceptional” nature of the Grovit and Doctor jurisdiction in that it was not to be used as a back door to the established principles on Birkett v. James in the absence of the required element of prejudice.  His Lordship said at 406, paras. 66, 69 and 70 :

“	66.	As the circumstances of this case neatly illustrate, unless the Grovit v. Doctor [1997] 1 WLR 640 line of argument is confined to those instances which are patently abusive of the process, and may be demonstrated to be so, there is a danger that the time-honoured and established Birkett v. James [1978] AC 297 doctrine — in terms of inordinate and inexcusable delay coupled with consequent prejudice — in effect will be emasculated by the back door, with the result that undue and inordinate delay, leading to inference of intention to prosecute the action no further, and hence characterization as an abuse of process, will be sufficient to get home on a strike-out in the absence of the required element of prejudice.
	…
	69.	In my judgment the appropriate approach to strike-out applications of this nature is that adumbrated by Auld LJ in Miles v. McGregor (unrep., Court of Appeal, 23 January 1998) wherein the learned Judge stated :
		‘The emphatic articulation and the application by the court in Choraria [Choraria v Sethia [1998] CLC 625, CA] of this quite separate power to strike out proceedings for wholesale disregard of procedural rules because it constitutes an abuse of process of this court should not, however, be taken as a ready alternative to the court’s power to strike-out an action for inordinate and inexcusable delay.  The abuse of process route is for cases of an exceptional nature where the conduct of the party in default amounts to an affront to the court and to its rules.  (Emphasis added.)’
	70.	… Something significantly more is needed than inordinate and inexcusable delay — it is probable that the clear requirement for a significant further element within the factual equation before the ‘abuse of process route’ can succeed in any given case is likely to elevate that case to something sufficiently out of the ordinary so as to merit the epithet ‘exceptional’.”

42.Mr Pierrepont relied on the following facts for the inference that the plaintiff had no real intention of proceeding to trial :

(1)	after the conclusion of the Order 14 proceedings in September 1994, the plaintiff did not set the case down for trial in accordance with the Court’s Order nor filed witness statements which it now says will be filing;
(2)	the period of inactivity since September 1994 is very lengthy;
(3)	no explanation of the delay was given;
(4)	even after the warning letter from the 5th defendant’s solicitors in September 2002, all the plaintiff had done was to serve a written request under the Guarantee in order to found a new cause of action.

43.Unlike the recent case of Hoi Sing Construction Co. Ltd (in liquidation) v. ITC Corp., HCA11433/1998 (date of judgment 22 April 2005) per Carlson DHCJ where during the five years of delay the liquidator was seeking silk’s opinion from London and negotiating a settlement, the plaintiff gave no explanation that it was doing anything of the sort.

44.Mr Pierrepont submitted that the warning letter in September 2002 was sufficient to make the plaintiff fully aware of the consequences of its inaction.  All they have done was to serve the written request to found a new action.  That was indicative of the dim view the plaintiff must have taken on the present action.  In support, Mr Pierrepont referred to Andrews & Millet on the Law of Guarantees (4^th Ed , 2005) at p.252 para. 7-007 that a mere notice of the principal debtor’s default will not constitute a sufficient demand for payment by implication : Bank of Montreal v. Agnew (1986) 72 NBR (2d) 276.  Mr Pierrepont submitted that the plaintiff was abandoning instead of mere warehousing its action.

45.Mr Shaw reiterated that after the re-re-amendment and Order 14 application, the issues were reconstituted and clearly the order to set down must have taken to lapse.  And in the plaintiff failing to take out a fresh summons for direction, the 5^th defendant could simply have done so.  In the event the summons is dismissed, the plaintiff will prepare witness statements.

46.Mr Shaw submitted that there is really nothing in the point that no explanation for the delay has been given.  It was no more than that an explanation had been given but was found to be inexcusable.

47.Mr Shaw also referred to the service of the written request in March this year and submitted that if the limitation had not expired, it would be unusual for the claim to be struck out.

48.Mr Pierrepont referred to Andrews & Millet p.255 para. 7-007 that :

“The contract may stipulate a time limit for performance of a condition precedent, but this is rare.  In theory, therefore, the creditor might prolong the limitation period against the surety, for example by delaying in making a demand or serving a notice which is an express condition precedent to the surety’s liability.  However, the creditor may be precluded from recovering against the surety by his unreasonable delay in fulfilling a condition precedent : Holl v. Hadley (1835) 2 Ad. & El. 758.”

49.With respect, Mr Shaw is confusing the different causes of action.  The present claim was founded on either written request was given in copying of the demand to the principal debtor, or no written request was necessary.  That claim must have been statute-barred.  Any claim on the March 2005 request must be on a cause of action not accruing at the time of the Writ herein.  That is clearly the plaintiff’s position on its without prejudice proviso in the March 2005 request.

50.In Arbuthnot Latham Bank Ltd & ors v. Trafalgar Holdings Ltd & ors [1998] 2 All ER 181, the English Court of Appeal held that on an application to dismiss an action for want of prosecution on the ground of delay, defendant was entitled to assume that normally the court would determine the issue on the basis of the claim which had been pleaded and which was before the court.  Thus, if that cause of action was statute-barred, the action could be dismissed notwithstanding that the plaintiff could rely on another cause of action which was not state-barred and the court should not embark on an investigation of the merits which would be raised to such fresh claim unless they were obviously unfounded.

51.Mr Shaw prayed for the Court’s discretion in saying that service on the 5^th defendant was difficult.  No evidence on that is given.  Mr Shaw said the 5^th defendant’s solicitors had not formally acknowledged service of the written request on his behalf.  In view of the fact that the 5^th defendant has always been legally represented, I fail to appreciate Mr Shaw’s point.

52.I have found against the 5^th defendant on Birkett v. James.  I am mindful of the warning of the Court of Appeal in the New China Hong Kong case that Grovit v. Doctor must not be used to emasculate the requirement of proving serious prejudice and substantial risk to a fair trial by the backdoor.

53.However, in this case I find that it has been demonstrated beyond peradventure that the plaintiff had no real intention of prosecuting to trial the action as presently constituted.  I am in no way pre-judging the matter but I can well see the difficulties presented for the plaintiff as in the judgment of Barnett J.  It is not surprising that more than 10 years, and after stern warning from the 5^th defendant’s solicitors of the consequences of delay, all they had done was to serve a written request in March 2005.  The length of the delay is one thing, but the whole course of conduct and attitude of the plaintiff has provided the special evidence for an abuse of process.  I find the conduct of the plaintiff exceptional in the sense that it never intended to comply with the scheme of the rules that after the framing of the issues and preparing for trial on those issues, the plaintiff should have set the cause down for trial.

Conclusion

54.I shall dismiss the plaintiff’s claim as an abuse of process. 

55.As the summons does not cover the counterclaim, and no submission has been made thereon, I make no order as to the counterclaim.

56.I shall make an order nisi that subject to any order for costs in favour of the plaintiff, the plaintiff do pay the costs of the 5^th defendant in the plaintiff’s action (including the summons herein), to be made absolute after 14 days.

57.I thank Mr Pierrepont and Mr Shaw for their helpful submissions.

Mr Geoffrey Shaw, of Messrs Deacons, for the Plaintiff

Mr Mark Pierrepont, of Messrs Victor Chu & Co., for the 5^th Defendant