Kuok Luen (Macau) Agente De Programas Televisivos Limitada & Others v. Tidetime Sun (Group) Ltd and Others
Read the full judgment text of HCA 1456/2006 on BabelCite. This High Court CFI judgment was delivered on 8 April 2011.
1. This is an appeal from a decision of Master Ng dated 20 July 2010 in which she struck out the plaintiff’s amended Statement of Claim and dismissed the action against the 1 st defendant (“D1”).
Cited by 4 cases · Cites 1 case
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HCA1456/2006 IN THE HIGH COURT OF THE HONG KONG SPECIAL ADMINISTRATIVE REGION COURT OF FIRST INSTANCE ACTION NO. 1456 OF 2006 ---------------------
Before : Deputy High Court Judge Burrell in Chambers Date of Hearing : 23 March 2011 Date of Judgment : 8 April 2011 ------------------------ J U D G M E N T ------------------------ 1.This is an appeal from a decision of Master Ng dated 20 July 2010 in which she struck out the plaintiff’s amended Statement of Claim and dismissed the action against the 1st defendant (“D1”). BACKGROUND 2.I propose to set out the background in outline only. The Master in this case handed down a comprehensive 55‑page written decision. A detailed factual background is contained therein. Neither I nor counsel on appeal make any criticism of the accuracy of the Master’s history of the case over the first nine pages of her decision. 3.The case concerns two contracts. The parties to the first contract in July 2000 were the plaintiffs, the 1st defendant and the 2nd defendant (“Ps, D1, D2”). By this preliminary agreement (“PA”) D1 and D2 agreed to purchase 60% of some shares owned by Ps at a particular price to be paid in the form of shares owned by D1. 4.Clause 8 of the PA stated :
5.Thus the PA was certain to terminate either on the signing of a formal agreement (“FA”) or 31 August 2000 whichever was sooner. 6.The FA was in fact signed on 8 August 2000. It was different from the PA in a number of ways :
7.Ps claim in these proceedings is that the FA was breached in 2002 when steps were taken in the management of ‘the Company’ in breach of the agreement which caused Ps substantial financial loss. PROCEDURAL HISTORY 8.Again, in outline only, the key events are as follows :
9.The grounds relied on before the Master were as follows :
10.The Master found for D1 on the bases of (a)(i) and (c). As for (b) she did find that ‘delay’ in the Birkett v James sense had been established but the necessary requisite of consequential prejudice to D1 had not been established. ISSUES ON APPEAL 11.Counsel on appeal for D1, Mr Anthony Houghton SC leading Mr Patrick Chong, was content that the appeal focuses only on those grounds which succeeded before the Master. He did not wish to persuade this court that she was wrong in rejecting grounds (a)(ii) and (b). 12.With this helpful start this appeal needs to address, by way of a rehearing, two questions. First, has D1 established that Ps have no arguable cause of action against it and that the claim is thereby an abuse of the court process (O.18, r.19)? Secondly, has D1 established that, pursuant to the principle in Grovit v Doctor [1997] 1 WLR 640, it is plain and obvious that Ps had no intention of pursuing the matter to trial? THE MASTER’S DECISION 13.The Master answered both questions in the affirmative and gave full written reasons for her decision. When a Master provides written reasons Hong Kong Civil Procedure 2011 at page 998 sets out the appellate courts position as follows :
14.What follows is this court’s reasons for upholding the Master’s reasons albeit in shorter form. ORDER 18, RULE 19 15.The test to be applied is as follows :
16.There can be no doubt that D1 does not feature in the FA. Throughout “the purchaser” is described in the singular and is D2. Ps submit they have an arguable case that D2 purchased the shares both on its own behalf and on behalf of D1. 17.I agree with the Master’s decision that this argument cannot succeed. Any sensible reading of the two agreements leads to the sole conclusion that D1 was specifically excluded from the FA. If D2 was purchasing as D1’s agent the FA could have and would have said so. D1’s inclusion in the PA was, inter alia, because the sale was to be via D1’s shareholding. Not so in the FA. In the FA the sale was by way of D2’s cash. 18.Any argument that the PA somehow survived the signing of the FA is also certain to fail. The intention of the parties in the PA is unequivocal. The FA crystallizes what was stated and intended in the PA as to the “shelf life” of the PA. The “intention” referred to in the recital of the PA, namely that “D1 and D2 intend to purchase upon terms …” can only be construed in the context of the terms stipulated in the PA. The terms of the FA are wholly and significantly different. 19.The FA is a lengthy and carefully drafted document (drafted by lawyers on both sides). No credible explanation has been advanced to explain D1’s absence from it other than that advanced by D1 itself. 20.After a careful analysis of a number of the contractual clauses in both the PA and the FA, the Master concludes :
21.In my judgment both her analysis and this conclusion cannot be faulted. 22.Thus on this ground alone D1’s summons to strike out succeeds. The need to consider the Grovit v Doctor limb of the appeal only arises in the event that this court and the court below are in error on the O.18, r.19 question. GROVIT V DOCTOR (a) The legal principle 23.When considering whether or not there had been inordinate and inexcusable delay under the Birkett v James principle the Master said this :
24.She then went on to find that delay had been established but that prejudice had not. The principle under consideration being :
25.The Grovit v Doctor principle is that delay can amount to an abuse of process in a different way. Under Grovit v Doctor abuse of process may be established if the inference to be drawn from the fact of inordinate and inexcusable delay is that the plaintiff had no real intention of pursuing its claim to trial. 26.The principle was considered, and notes of caution therein stated, in the case of New China Hong Kong Group v AIG Infrastructure Fund LP and other [2005] 1 HKLRD 383. Stone J observed :
and later went on to say :
27.A thorough review of the authorities up to 2005 was made in the New China case. 28.In April 2009 the Civil Justice Reforms were introduced into Hong Kong law (“CJRs”). In my judgment the caution highlighted in the New China case remains good, indeed Lord Wolff’s reforms and the direction in which the civil law in England and Hong Kong was moving were specifically mentioned in the judgment. Nonetheless the position, must be that the CJRs now provide the guiding spirit and the ‘New China caution’, if I may so call it, should be viewed in a post 2009 context. (b) The facts 29.The amended Statement of Claim was filed in September 2006, approximately four years after the alleged breach of contract. 30.In October 2007 the plaintiff was subjected to a court order granting leave to set the case down within 42 days. Mr Ambrose Ho SC leading Mr Simon Lam, submits that this should be viewed as a granting of leave to take a step in the proceedings and no more. Thus, as it is not a positive direction its non-compliance is less serious. 31.I do not agree with this submission. Non-compliance in fact subjects the plaintiff to the risk of the action being dismissed. If the 42‑day period passes by the plaintiff would have to make another application which may not be granted. The plaintiff’s failure to set down within time was a failure to comply with a court order by simply ignoring it. 32.In my assessment of the ‘delay’ in this case I disregard the fact that Ps filed a supplemental list of four further documents in October 2008. Thus for the next 2½ years Ps did not re-apply to set down, neither did they apply for an extension of time to set down. Moreover there was no meaningful responses to correspondence from D1’s solicitors drawing the non-compliance to their attention. 33.What did bring the inaction to an end was D1’s summons to strike out. The timing of such an application can be difficult. The possible consequence of a premature application is obvious and equally, an over tardy one could lead to criticism of the applying party. 34.In this case D1 seems to have left it as long as reasonably possible. In any event I find it entirely reasonable to suggest that had they not applied the delay would have continued. There is no evidence that Ps would have brought the delay to an end in the near (or even distant) future by their own conduct. 35.Once the delay is defined, here 2½ years, and once the author of the delay, here the plaintiff, is identified it is important to consider what, if any, excuses or explanations are offered for the delay. 36.The only explanation offered came not from the plaintiffs but from P3’s personal assistant who said that Ps were “looking for an accounting expert to provide opinion on assessing damages”. This lame excuse is wholly inconsistent with their October 2007 checklist which had stated that no expert evidence would be called. By the time D1 issued this summons in July 2010 no further steps had been taken in the Ps search for an accounting expert. 37.In short, I agree with the Master’s assessment of the explanations for delay as being “incredible and unconvincing”. 38.The penultimate question is this; has D1 established that the inordinate and inexcusable delay can only be construed as an intention not to pursue the matter to trial? The word often used to describe this conduct is “warehousing”. 39.Before deciding whether Ps are guilty of ‘warehousing’ this case in the Grovit v Doctor sense I make a final observation. I have already found in D1’s favour under O.18, r.19. When considering Grovit v Doctor abuse of process issue it is plainly on the basis of Ps having a case rather than no case. However, it is proper in my view to consider it on the basis that it is nonetheless a weak case. The weakness of P1’s case at trial can be a relevant factor in looking at the matter in the round when deciding if there has been warehousing or not. A weak case can be described in many different ways. “An uphill struggle”, “a claim fraught with difficulties”, “paper thin” are examples. If a court can properly categorize the claim as such it may be taken into account. 40.Taking an overall view of the undisputed facts and the court’s findings of fact the matter may be summarized as follows :
41.I agree this is not a case of ‘mere’ delay. There is ‘more’. The facts lead to a compelling inference that there was no real intention to take D1 to court. I agree with the Master that the entire picture constitutes an abuse of process. 42.The final question concerns residual discretion. The court must still be satisfied that it would be fair and just to strike out and dismiss the claim. In this case an exercise of residual discretion in Ps favour would amount to turning a blind eye to all the criticisms of Ps conduct of this action. In short (and particularly bearing in mind that half of the delay complained of has been post‑CJR) it would be unjust not to make the order sought. 43.The Master’s order stands. The appeal is dismissed with costs to D1.
Mr Ambrose Ho, SC, leading Mr Simon K.C. Lam, instructed by Messrs Fung Wong Ng & Lam, for the Plaintiff Mr Anthony Houghton, SC, leading Mr Patrick Chong, instructed by Messrs Chong & Yen, for the 1st Defendant Plaintiff's appeal to Court of Appeal dismissed. Please refer to CACV77/2011 dated 4 October 2011 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||
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